LIBRARY 

OF  THE 

UNIVERSITY  OF  CALIFORNIA. 


Class 


WORKS  MANAGEMENT  LIBRARY 


PROFIT  MAKING 

IN 

SHOP  AND  FACTORY 
MANAGEMENT 


BT 

CHARLES  U.  CARPENTER 


r?s 

e'J      "\ 

SSTV  ) 

/ 


NEW  YORK 

THE  ENGINEERING  MAGAZINE 
1908 


Copyright,  1908 
By  JOHN  R.  DUNLAP 


WAVER LY   PRESS 
BALTIMORE 


PREFACE. 

"Profit  Making  in  Shop  and  Factory  Management"  is  a  concise 
expression  of  the  methods  which  Mr.  Carpenter  has  developed  and 
which  he  constantly  uses  in  his  own  practice.  They  have  been  tried 
and  perfected  under  the  stress  of  daily  operation  in  the  course  of  his 
experience  as  supervisor,  *  manager,  head  of  the  labor  department, 
and  president,  of  various  large  manufacturing  plants,  notably  the 
National  Cash  Register  Company  and  the  Herring-Hall-Marvin  Safe 
Company,  of  which  latter  concern  he  is  now  chief  executive. 

The  contents  of  the  book  appeared  first  in  the  form  of  a  series  of 
articles,  prepared  for  and  published  hi  The  Engineering  Magazine 
during  the  year  1907.  As  now  presented  in  this  volume,  they  have 
been  carefully  revised,  in  some  points  enlarged,  to  a  certain  extent 
rearranged,  and  a  modified  division  into  chapters  has  been  introduced. 
These  alterations  however  are  only  hi  details,  adapting  more  effec- 
tively to  permanent  form  the  sections  which  were  produced  serially, 
and  grouping  them  most  advantageously  from  the  closer  perspective 
which  is  given  to  the  reader  of  a  book.  The  subject  matter  is  un- 
changed in  substance,  and  is  even  more  complete  than  when  it  was 
first  printed  hi  the  Magazine. 

The  study  of  works-management  methods  will  be  found  to  be 
marked  throughout  by  the  clear  sight,  the  fair  mind,  the  direct  deal- 
ing, and  the  strong  vitality  of  the  author.  The  whole  treatment  is 
vibrant  with  life,  the  work  indeed  having  been  produced  amid  the 
incessant  and  insistent  claims  of  active  work  hi  the  management  of 
the  great  manufacturing  company  of  which  he  is  president  and  man- 
ager. It  is  inspired  by  his  keen  interest  in  the  promotion  of  better 
ideals  in  industrial  organization.  It  is  largely  a  labor  of  love,  freely 
devoted  to  the  advance  of  the  profession  of  industrial  engineering. 
And  it  bears  throughout  the  stamp  of  tried,  practical  success. 

THE  EDITOR. 

205598 


CONTENTS. 

CHAPTER  I.    THE  REORGANIZATION  OF  A  RUN-DOWN  CONCERN 

The  Necessity  for  Analysis  of  Existing  Conditions — Advantageous  Posi- 
tion of  a  Well  Organized  Concern — The  Manufacturer  with  his  Eyes  Closed — 
The  Manufacturer  with  his  Hands  Tied — Organizing  the  Methods  of  Inves- 
tigation and  Analysis — The  Usual  Defects  of  Organization,  System  and 
Methods  in  Manufacturing  Plants — The  Superintendent — The  Foremen — 
Job  Bosses  and  Workmen — Systems  of  Pay  and  their  Effect — The  Stock 
System — The  Order  and  Tracing  System — The  Cost  System — Machining 
Methods — Defects  of  the  Sales  Department — Defects  of  Executive  Con- 
trol    9 

CHAPTER  II.    THE  PRACTICAL  WORKING  OP  THE  COMMITTEE  SYSTEM 

No  Ready-Made  System  is  a  Panacea — Why  New  Systems  so  Often 
Fail — Co-operation  of  the  Working  Force  is  Essential — The  Human  Element 
and  the  Get-Together  Spirit — Formation  of  the  Committee  System — The 
General  Factory  Committee — Its  Personnel — Its  Work — Its  Meetings — 
Subsidiary  Committees — Job  Bosses'  Meetings — General  Foremen's  Meet- 
ings— The  Workmen — Promotions 23 

CHAPTER  III.    REPORTS;  THEIR  NECESSITY  AND  THEIR  USES 

The  Necessity  for  Reports  of  Varied  Kinds — What  they  should  be  and 
what  they  should  Cover — A  General  Outline  of  the  Essential  Reports — The 
Monthly  Analyzed  Profit  and  Loss  Sheet — The  Sales  Reports — The  Factory 
Reports — The  Cost  Reports — The  Points  to  be  Shown  and  the  Methods  of 
Use 36 

CHAPTER  IV.    THE  DESIGNING  AND  DRAFTING  DEPARTMENT 

Results  to  be  Secured — Close  Relations  with  the  Tool  Room — Require- 
ments of  an  Efficient  Drafting  Department — Meetings  with  the  Com- 
mittees— Co-operation  with  Shop  Foremen — Standardization  in  Design — 
Designing  for  Cheap  Machining  and  Assembling — Making  and  Following 
of  Drawings  to  be  Invariable — Reports  from  Machining  and  Assembly 
Departments — The  Use  of  the  Committee  System 42 

CHAPTER  V.    THE  TOOL  ROOM  ;  THE  HEART  OF  THE  SHOP 

The  Full  Functions  of  the  Tool  Room — Systems  of  Tool  Supply — 
Speed  of  Production  in  the  Tool  Room  of  Vital  Import — Methods  for 
Hastening  Production — The  Choice  of  the  Foreman — Specialization  of 

5 


6  CONTENTS 

Labor — Standardization — Duplication  of  Standard  Parts — Subdivision  of 
Labor — The  Small  Shop — Speeding  up  Tool  Production  and  Checking  the 
Cost — Tool-Cost  Cards — Examples — Method  of  Use — Tool-Room  Commit- 
tee Membership 50 

CHAPTER  VI.     MINIMIZING  THE  TIME  OF  MACHINE-TOOL  OPERATIONS 

The  Determination  of  Standard  Times — The  Concentration  of  the  Work- 
man's Time  on  Running  his  Machine — The  Adoption  of  High-Speed  Steel — 
Causes  of  Lost  Time — The  Starting  Point  in  Minimizing  Operation  Costs — 
Investigation  of  Existing  Machinery — Systematic  Report  upon  Improve- 
ments in  Old  Machines  and  Recommendations  for  Replacements  or  New 
Purchase  64 

CHAPTER  VII.     POSSIBILITIES  ATTENDING  THE  USE  OF  HIGH-SPEED  STEEL 

What  Percentage  of  Increase  may  be  Expected  in  the  Output — The 
Abundant  Provision  of  Cutting  Tools — Standard  Shapes  for  Tools — How 
Determined — Forging — Hardening — Form  for  Records — Cooling — Grind- 
ing— Use  of  Automatic  Grinders 73 

CHAPTER   VIII.     The    DETERMINATION   OF    STANDARD    TIMES  FOR    MACHINING 
OPERATIONS 

The  Shop  Conditions  upon  which  Standard  Times  Depend — Tests  of 
Times  which  should  be  Attained — How  to  Begin — Classification  of  Parts — 
The  Expert  Tester — His  Qualifications — Practical  Speeds  in  Lathe  Work — 
In  Planer  Work— In  Drilling— Tables— How  to  Use  the  Tables— The  Com- 
mittee at  Work — Requirements  for  Maximum  Production  by  the  Work- 
man   83 

CHAPTER  IX.     STANDARD  TIMES  FOR  HANDLING  THE  WORK 

The  Elements  which  must  be  Considered — Causes  of  Lost  Time  in  Hand- 
ling— Injuries  to  Stock  or  Parts  in  Handling — The  Use  of  Standard  Boxes — 
Standard  Places  for  Stock  and  Parts — Records  of  Handling  Times — 
Forms — Setting-up  Time — Times  for  Work  on  the  Machines — Time  for 
Removing  Work  from  the  Machines — The  Use  of  Committee  Action 94 

CHAPTER  X.     STANDARD  TIMES  FOR  ASSEMBLING 

Special  Difficulties  to  be  Found  in  this  Subject — Methods  of  Procedure 
which  Succeed — Examples  of  Results  Secured — An  Instructive  Case 
Described — Foremen's  Co-operation  Essential — How  it  can  be  Enlisted. .  .  .  101 

CHAPTER  XL     STIMULATING  PRODUCTION  BY  THE  WAGE  SYSTEM 

The  Attitude  of  the  Workman — Mischief  Caused  by  Cutting  of  Rates — 
The  True  Theory  of  Costs — The  Wage  Problem  in  Introducing  Standard 
Times — How  to  Get  the  Workman  to  Stand  for  Them — Systems  of  Pay — 
Day  Work — Piece  Work — Premium  Plan — The  Differential  Plan — The 
Bonus  Plan — Special  Modifications  of  the  Bonus  Plan  Recommended 109 


CONTENTS  7 

CHAPTER  XII.    STOCK  AND  COST  SYSTEMS  AS  A  FACTOR  IN  PROFIT  MAKING 

The  Prime  Requisites  of  a  Cost  System — What  it  should  Accomplish — 
The  Three  Fundamental  Problems  at  a  Stock  System — A  Simple  and  Suc- 
cessful System  Described — The  Forms  and  Cards  and  their  Mode  of  Use — 
Storage  Platforms  and  what  they  Accomplish — Stock-Tracing  and  Cost 
Sheets— Forms— How  the  Data  are  Used 116 

CHAPTER  XIII.     THE  UPBUILDING  OF  A  SELLING  ORGANIZATION 

The  Various  Methods  of  Selling  Manufactured  Goods  Denned — What  is  to 
be  Considered  in  Developing  a  Selling  Force — Training  of  Salesmen — Its 
Possibilities  Proved — Development  of  a  Selling  System — Salesmen's  Demon- 
stration Meetings — A  Typical  Programme — Modes  of  Stimulating  Interest — 
Salesmen'  Training  Department — Selection  of  an  Instructor — Prepara- 
tion of  a  Manual — Reports  and  their  Importance — Forms — Lists — Adver- 
tising   124 

CHAPTER  XIV.  EFFECTIVE  ORGANIZATION  IN  THE  EXECUTIVE  DEPARTMENT 
Difficulties  Peculiar  to  the  Executive  Division — The  Personal  Element — 
The  Use  of  the  Report  System — Reports  from  the  Selling  Division — Forms 
— Factory  Reports — Forms — Executive  Reports — Forms — The  Methods 
Illustrated  by  an  Example  and  a  Typical  Programme — The  Results 
Secured ..138 


PROFIT  MAKING  IN  SHOP  AND  FACTORY 
MANAGEMENT 

CHAPTER  I. 
THE  REORGANIZATION  OF  A  RUN-DOWN  CONCERN. 

IN  the  day  of  prosperity,  when  manufacturers  are  behind  their 
orders,  running  full  forces  night  and  day,  straining  every  nerve 
to  increase  production  and  are  further  embarrassed  by  a  constant 
influx  of  new  business,  the  consideration  of  the  problems  confront- 
ing a  "run-down"  concern  and  the  ways  and  means  of  correcting 
its  serious  defects  in  organization,  methods,  and  systems  might  not, 
upon  first  thought,  appear  "  timely." 

I  contend,  however,  that  the  present  is  the  time  to  attack  and 
solve  these  problems.  Experience  and  investigation  have  disclosed 
an  amazing  number  of  concerns  which,  even  under  prosperous  con- 
ditions, have  been  having  none  too  easy  a  time  in  making  headway. 
Many  manufacturers  today  have  an  uncomfortable  sensation  of 
uncertainty  concerning  the  progress  and  profits  of  the  establish- 
ments under  their  management. 

Any  manufacturer  feeling  the  existence  of  unsatisfactory  and 
unprofitable  conditions  must  make  up  his  mind  that  the  real  reasons 
for  them  must  be  discovered  and  the  causes  removed  at  any  cost; 
for  should  the  management,  in  its  conduct  of  the  business,  not 
discover  its  weaknesses,  this  same  management  may  be  sure  that 
some  thoroughly  organized  competitor  will  drive  the  condition 
to  their  startled  attention  when  more  severe  seasons  of  trade  come 
upon  us. 

9 


10  PROFIT-MAKING   MANAGEMENT 

NECESSITY  FOR  ANALYSIS. 

To  solve  the  problems  confronting  him;  a  man  must  bring  to  them 
an  absolutely  unbiased  mind  and  a  determination  to  analyze  the 
situation  thoroughly  and  mercilessly,  and  so  to  form  an  accurate 
judgment  as  to  the  underlying  reasons.  You,  the  manufacturer, 
may  be  sure  that  unless  your  factory,  selling,  and  executive  organi- 
zations can  stand  this  test  of  your  coldest  and  most  searching  exami- 
nation— your  analytical  test — with  any  change  from  expanding 
conditions  of  trade,  you  will  find  the  foundation  of  your  business 
slipping  from  under  it,  slowly  perhaps,  but  surely. 

ADVANTAGEOUS  POSITION  OF  A  WELL  ORGANIZED   CONCERN. 

We  hear  much  today  of  the  advantages  that  one  competitor 
secures  over  another  through  the  "secret  rebate,"  special  " shipping 
privileges,"  unfair  "rate  classifications,"  "secret  agreements,"  etc. 
In  a  manufacturing  business  these  advantages  count  for  little  against 
a  company  with  an  effective  organization  of  the  working  force, 
stimulated  by  a  desire  to  work  not  only  for  self  but  also  for  the  good 
of  the  concern,  aided  by  up-to-date  mechanical  methods  and  modern 
tools  especially  adapted  to  the  quick,  accurate,  and  economical 
manufacture  of  the  parts  to  be  produced;  supported  by  comprer 
hensive,  though  simple,  systems  that  enable  the  management  to 
keep  an  accurate  check  upon  the  cost  of  production,  and  also  enable 
them  to  determine  the  proper  course  to  pursue  in  order  to  secure 
still  greater  economies — a  system  of  manufacture  that  enables  the 
management  to  feel  certain  that  the  most  economical  methods  of 
production  are  being  planned  and  pursued. 

Add  to  this  an  efficient  selling  force,  properly  trained  by  modern 
methods,  and  an  economical  plan  of  putting  the  manufactured  goods 
upon  the  market,  and  the  firm  possessing  such  advantages  is  in  an 
impregnable  position. 


FIRST    REQUISITES    IN   REORGANIZATION  11 

THE  MANUFACTURER  "WITH  His  EYES  CLOSED." 

In  this  day,  a  firm  which  would  hold  its  own,  must  adopt  the 
most  modern  methods  in  organization,  method,  and  system.  Repu- 
tation gained  in  the  earlier  days  of  a  firm's  existence  is  a  valuable 
asset  when  backed  up  by  modern  methods,  but  amounts  to  little 
when  it  is  coupled  with  obsolete  ways  of  doing  business.  A  business 
must  progress  or  slide  backward.  It  cannot  stand  still.  The  manu- 
facturer can  always  feel  certain  that  if  he  is  not  progressing  some 
one  of  his  competitors  surely  is.  This  he  may  learn  to  his  sorrow. 
The  old  maxim  "a  stern  chase  is  a  long  one"  applies  with  peculiar 
force  to  business  conditions.  Once  your  competitor  has  built  his 
tools  for  economical  production,  improved  his  product,  organized 
his  forces,  and  secured  the  proper  start  on  the  market,  his  sales  and 
profits  multiply  and  yours  decrease.  And  the  longer  you  delay 
adopting  similar  methods,  the  more  the  difficulties  increase. 

There  are  still  many  manufacturers  who  are  not  satisfied  to  give 
their  unqualified  approval  to  modern  methods  in  shop  and  selling 
organization.  The  number  is  growing  less  every  day,  but  there  are 
thousands  to  whom  these  remarks  yet  apply.  To  these  the  very 
word  "organization"  implies  something  mysterious — something  big, 
and  certainly  something  expensive.  The  idea  of  "organization" 
is  not  compatible  with  their  idea  of  economical  management.  To 
these  the  idea  of  "system"  is  indissolubly  linked  with  "red  tape." 
"System"  to  them  means  additions  to  their  clerical  force,  and  addi- 
tions to  their  clerical  force  means  additional  dollars  spent  upon 
"non-producers."  They  will  refuse  to  admit  the  advisability  of 
systems  sufficient  to  care  for  their  heavy  factory  interests,  and  yet 
they  have  sufficient  intelligence  to  keep  up  their  general  accounting 
system.  In  brief,  they  do  not  note  the  tremendous  leaks  hi  their 
factories  because  they  have  not  sufficient  experience  or  data  to  enable 
them  to  know,  with  any  degree  of  exactness,  whether  or  not  they 
are  getting  proper  and  economical  results  from  either  foremen, 
men,  or  machinery.  A  moment's  thought  must  make  such  as  these 


12  PROFIT-MAKING    MANAGEMENT 

realize  the  possibilities  of  the  existence  of  such  leaks,  and  they  may 
be  absolutely  certain  that  where  such  possibilities  exist,  unchecked 
and  unsystematized,  there  also  exist  the  losses. 

THE  MANUFACTURER  "WITH  His  HANDS  TIED." 
There  are,  however,  many  manufacturers  on  the  other  hand  who 
realize  that  something  is  wrong,  seriously  wrong,  and  who  would  be 
glad  to  adopt  modern  methods  if  they  but  knew  what  they  were  and 
how  to  apply  them.  But  to  many  a  man  who  is  intent  on  improving 
conditions,  but  who  necessarily  faces  ignorance,  prejudice,  false 
pride,  and  stubbornness  on  the  part  of  those  in  his  organization  who 
should  help  him,  the  job  is  appalling.  To  such,  however,  as  recog- 
nize the  conditions  and  are  willing  to  attack  the  problem,  methods 
can  be  suggested,  the  value  of  which  has  been  proven  over  and  over 
in  actual  experience  under  the  most  distressing  conditions.  Careful 
investigations,  coupled  with  a  thorough  campaign  of  action  along 
organized  lines,  will  bring  the  reward. 

THE  REWARD. 

The  reward  for  such  investigation,  coupled  with  vigorous,  intelli- 
gent, and  tactful  action,  is  so  great  as  to  justify  the  expenditure  of 
any  amount  of  labor  and  time.  That  it  will  take  time,  and  in  most 
cases  a  long  time,  is  very  true;  but  that  is  all  the  more  reason  for 
beginning  and  continuing  courageously  along  steady  lines  of  pro- 
gress, and  hi  such  a  manner  that  any  backward  step  would  not  be 
be  possible.  The  most  difficult  and  discouraging  problem  to  con- 
tend with,  next  to  the  difficulty  of  wheeling  the  old  men  into  line, 
is  that  of  progressing  along  new  lines,  devising  and  putting  into 
effect  new  methods  and  new  processes  and  tools,  and  at  the  same 
time  not  interfering  with  the  regular  required  output.  However, 
if  the  manager  is  sufficiently  impressed  by  stern  necessity  to  lay  out 
plans  for  improvement,  every  one  upon  whom  he  must  depend  must 
be  impressed  with  the  idea  that  every  day  must  show  some  progress, 
however  slight,  on  the  part  of  every  one  connected  with  the  plans. 


FIRST   REQUISITES   IN   REORGANIZATION  13 

ORGANIZING  THE  METHOD  OF  INVESTIGATION  AND  ANALYSIS. 

As  stated  before,  nothing  can  be  done  in  any  case  until  the 
manufacturer,  and  such  advisers  as  are  qualified  and  trustworthy, 
approach  the  problem  in  an  absolutely  unbiased  frame  of  mind. 
They  must  make  up  their  minds  to  analyze  coldly  each  and  every 
man  and  situation.  The  problem  may  be  attacked  as  outlined  here- 
inafter. 

Let  us  consider  first  the  usual  defects  hi  organization,  system,  and 
methods,  hi  their  order,  and  attempt  to  discover  the  "sticking  points" 
in  each  division.  They  may  be  classified  as  follows: — 

1. — Defects  of  factory  organization,  dealing  with  the  superintend- 
ent, the  foremen,  the  job  bosses,  and  the  workmen,  and  the  usual 
methods  of  management. 

2. — Defects  of  systems  and  methods  of  manufacturing. 

3. — Defects  of  sales  organization  and  executive  control. 

The  separations  made  here  are  important  ones  and  should  be 
considered  as  thoroughly  hi  the  case  of  the  concern  with  fifty  men 
as  in  the  case  of  the  one  with  five  thousand. 

If  you  are  interested,  take  these  divisions  item  by  item  and 
make  a  faithful  memorandum  of  the  defects  under  each  heading 
that  you  alone  know  of.  If  you  have  such  a  knowledge  of  the  busi- 
ness as  you  should  have  you  will  be  surprised  at  the  number  of 
your  notations.  Then  when  you  come  to  the  headings  of  those 
processes  with  which  you  are  not  familiar,  secure  the  advice  of  com- 
petent persons  in  each  line  and  observe  the  extent  and  character  of 
your  notes. 

I.    DEFECTS  OF  FACTORY  ORGANIZATION. 

THE  SUPERINTENDENT. 

Singularly  enough,  the  method  of  management  usually  adopted 
is  that  of  placing  all  the  responsibility  on  the  shoulders  of  one  super- 
intendent and  failing  to  surround  and  strengthen  him  with  a  small 


14  PROFIT-MAKING    MANAGEMENT 

body  of  the  most  efficient  foremen,  who  might  prove  to  be  advisers 
of  great  value  to  him.  In  adopting  such  a  method,  the  manage- 
ment fails  to  recognize  the  great  benefit  to  be  derived  from  securing 
the  best  advice  of  a  small  group  of  the  best  qualified  men  upon  most 
important  subjects,  and  from  giving  its  foremen  an  opportunity 
to  increase  their  knowledge  of  the  business  and  so  to  grow  to  be  of 
greater  worth  to  the  concern.  The  stimulus  to  the  ambition  of  the 
foremen  because  of  the  opportunity  so  to  show  their  worth  is  thus 
lost.  Instead  of  these  men  being  moved  by  the  hearty  desire  to 
co-operate  with  the  firm  and  with  each  other  "  for  the  good  of  the 
company,"  they  are  usually  impelled  by  feelings  of  jealousy  and 
impair  the  efficiency  of  themselves  and  the  entire  organization  by 
their  backbiting  and  faultfinding. 

And  yet  with  any  method  of  organization  there  must  be  a  head 
and  a  strong  one.  A  "  cheap"  superintendent  is  dear  at  any  price. 
A  strong  and  capable  man  in  this  position  is  usually  worth  any 
reasonable  amount  necessary  to  secure  or  retain  him.  A  large 
manufacturer  once  said:  "My  $20,000  superintendent  is  the  cheapest 
man  I  have."  In  reply  to  the  expected  "Why?"  he  said:  "He's 
my  ' dividend  maker.'  I  tried  'em  at  $3,000,  $5,000,  $10,000,  only  to 
keep  on  losing.  Finally,  I  made  up  my  mind  I  wouldn't  pay  less 
than  $20,000 — got  my  man,  and  he's  bringing  my  dividends.  Cheap 
at  $20,000." 

THE  FOREMEN. 

The  most  important  men  in  the  shop.  You  may  have  the  best 
qualified  superintendent,  but  if  you  have  inefficient  foremen,  you 
have  poor  management;  you  may  have  the  best  machinery — but 
with  inefficient  foremen,  poor  results;  the  best  systems — complica- 
tion; the  best  desires  toward  your  workmen — your  poor  foremen 
bring  upon  you  labor  troubles  galore. 

When  one  stops  to  consider  that  these  are  the  men  who  come  into 
daily  touch  with  your  workmen — that  they  practically  control  the 
shop  life  and  shop  destinies  of  your  men  on  machines  and  bench — 


FIRST   REQUISITES   IN   REORGANIZATION  15 

that  to  them  falls  the  responsibility  of  getting  the  best  results  from 
the  workmen,  and  upon  their  knowledge  you  must  depend  when  it 
comes  to  the  question  of  getting  the  proper  and  best  results  from 
the  machinery  you  have  bought — is  it  not  absolutely  true  that  they 
are  the  most  important  men  in  the  shop,  and  that  their  methods, 
their  intelligence,  their  experience,  are  questions  most  vital  to  you 
and  your  business? 

Usual  Methods  of  Appointment  and  Development. — And  yet 
what  are  the  facts  in  many  cases?  The  foreman  is  often  a  former 
machine  hand  promoted  to  this  position  because  of  superior  intelli- 
gence, diligence,  and  desire  to  please.  This  man,  who  should  have  a 
wide  and  thorough  experience  hi  modern  machine  practice,  is  often 
simply  a  graduate  of  your  own  shop,  with  experience  limited  to  your 
routine  practice. 

The  Proper  Type. — The  foreman  should  have  a  thorough  knowl- 
edge of  the  best  mechanical  processes  and  the  types  of  machines  best 
suited  for  the  work  he  handles.  He  should  have  also  a  wide  knowl- 
edge of  the  tools,  such  as  jigs,  milling  fixtures,  dies,  etc.,  best  adapted 
to  his  work,  and  of  methods  of  using  them  so  as  to  procure  the 
greatest  economy  hi  production;  and,  last  but  not  least,  the  ability 
to  handle  men  and  get  the  best  from  them.  Am  I  setting  too  high  a 
standard  for  the  foreman?  I  say  No !  positively  No !  These  are  the 
men  who  can  "  make  or  break"  the  concern.  As  is  the  foreman,  so  is 
the  department.  In  nine  cases  out  of  ten,  he  is  your  "Sticking  Point," 
or  is  responsible  for  it,  be  it  poor  workmanship,  high  costs,  tardy  pro- 
duction, or  trouble  with  your  workmen.  This  is  as  true  of  the  small 
shop  as  of  the  large  one. 

Therefore,  select  him  with  care,  watch  him  and  help  him,  edu- 
cate him,  and,  above  all,  give  him  the  stimulus  of  "his  chance" 
and  watch  him  grow,  if  he  is  the  right  kind. 

True  it  is  that  hi  the  most  modern  shop's  the  tendency  now  is  to 
depend  less  and  less  upon  the  foremen  on  the  important  questions 
of  speed  of  machines,  types  of  tools,  setting  of  standard  time,  and 


16  PROFIT-MAKING   MANAGEMENT 

proper  prices  on  jobs.  The  best  practice  in  the  up-to-date  shop  is 
to  institute  speed  bosses,  rate-making  departments,  and  tool  and 
tool-designing  departments,  entirely  independent  of  the  foremen. 
In  fact,  as  will  be  brought  out  later,  such  plans,  properly  instituted 
and  carried  out,  will  accomplish  wonders;  but  this  course  is  rendered 
necessary  because  of  the  weakness  of  the  ordinary  foremen.  But 
in  most  shops  it  is  hardly  possible  to  consider  such  elaborate,  though 
extremely  valuable  plans  amongst  the  first  steps.  Depend  upon 
your  foremen  you  must.  Even  though  the  greater  plan  of  organiza- 
tion with  speed  bosses,  rate-making  departments,  etc.,  may  be 
determined  upon,  this  consideration  of  the  foremen's  efficiency  is 
equally  necessary.  In  fact,  the  broader  plan  will  utterly  fail  unless 
it  is  supported  by  the  intelligent  efforts  of  the  heads  of  depart- 
ments. 

The  Management's  Representatives. — Never  forget  that  the  fore- 
men are  the  management's  direct  representatives  to  the  workmen. 
The  men  form  their  opinion  of  the  company  from  their  opinion  of 
then*  foremen.  Then*  daily  life  and  career  are  subject  to  his  control, 
his  whims  and  vagaries ;  their  promotions  and  increases  in  pay  depend 
upon  his  characteristics  and  knowledge.  They  more  often  have 
reason  to  depend  upon  his  practice  of  favoritism  than  upon  his  sense 
of  fairness.  The  character  and  ability  of  the  foremen  affect  the 
workmen  more  directly  than  any  other  three  factors  in  the  shop 
organization  and  management,  and  as  a  consequence  have  a  direct 
effect  upon  their  output  and  disposition  toward  the  company. 

JOB  BOSSES  AND  WORKMEN. 

In  any  shop  organization,  however  small,  the  question  of  the 
proper  division  of  the  working  force,  so  that  the  proper  amount  of 
supervision  can  be  given  to  each  man  or  group  of  men,  must  receive 
careful  attention.  A  foreman  cannot  properly  oversee  his  entire 
department  without  assistance  and  still  give  his  attention  to  the 
larger  and  more  important  details  of  his  work.  The  usual  method 

I 


FIRST   REQUISITES   IN   REORGANIZATION  17 

of  securing  this  result  is  to  appoint  the  more  efficient  members  of 
the  working  force  "job  bosses"  with  some  limited  degree  of  authority 
over  a  small  group  of  men.  These  men  perform  their  share  of  the 
work,  receiving  a  slight  increase  in  their  pay. 

The  importance  of  carefully  selecting  these  men  is  at  once  appar- 
ent. They  are  usually  the  next  in  line  for  advancement  to  assistant 
foremanship.  From  these  men  come  your  heads  of  departments. 
And  yet  how  many  managers  or  shop  superintendents  possess  accu- 
rate information  concerning  the  character  and  ability  of  their 
job  bosses?  They  usually  promptly  pass  over  to  the  foremen  the 
responsibility  for  making  these  selections,  and  very  often  they  in 
turn  just  as  promptly  pass  the  coveted  position  to  some  favored 
friend  without  much  regard  to  the  matter  of  his  ability  compared 
to  that  of  the  rest  of  the  group  affected — or,  to  drive  the  thought 
harder  home — without  regard  to  the  ability  and  intelligence  of  the 
rest  of  the  candidates  for  promotion.  Advancement  in  wage  and 
authority  is  as  important  to  the  $1.50  per  day  workman  as  it  is  to 
the  superintendent.  It  is  the  neglect  of  just  such  points  as  these 
that  cause  workmen  to  feel  that  merit  and  hard  work  count  for  little, 
and  that  extra  effort  brings  no  reward  in  the  face  of  an  unfair 
foreman's  selection  of  his  friends  and  favorites  for  the  only  progress 
that  is  possible  to  them. 

SYSTEM  OF  PAY  AND  ITS  EFFECT  UPON  WORKMEN. 

Of  equal  importance  in  its  direct  effect  upon  men  is  the  question 
of  the  "system  of  pay"  and  the  method  of  handling  it.  Little  will 
be  said  at  this  point  regarding  these  matters.  However,  hi  consider- 
ing the  defects  directly  affecting  the  workmen  and  seriously  affecting 
the  cost  of  production  in  many  forms  of  business,  the  first  prize 
(for  total  inefficiency)  may  usually  be  given  blindly  to  the  pay 
system  without  much  danger  of  going  amiss. 

The  average  system,  usually  piece  work,  started  by  men  little 
versed  in  modern  methods  and  based  upon  data  usually  secured  by 


18  PROFIT-MAKING    MANAGEMENT 

the  foreman  by  methods  "strictly  their  own'' — and  as  often  totally 
incorrect — supplies  a  first-class  millstone  to  burden  any  concern. 

Little  faith  can  usually  be  placed  in  the  average  foreman's  esti- 
mate of  a  "fair  price"  for  a  job.  Lacking  proper  knowledge  him- 
self, he  will,  however,  unhesitatingly  and  with  a  great  display  of 
confidence,  place  a  price  upon  any  piece  of  work.  Then  follows  the 
old  story  of,  first,  excessive  earnings  by  workmen;  second,  dissatis- 
faction on  the  part  of  the  employer,  and  consequent  reductions  in 
price;  and,  third,  the  invariable  result  of  discontented  workmen, 
who  find  that  their  only  protection  from  reductions  in  price  lies  in 
the  strict  adherence  to  a  certain  limited  rate  of  earnings  and  hence 
of  production.  The  foremen  continue  blithely  to  set  the  prices, 
the  employer  suffers  unconsciously  through  excessive  costs  and 
limited  output,  and  the  workman  works  away  discontented  and 
determined  to  even  up  matters  for  unfair  treatment.  These  con- 
ditions are  still  very  prevalent. 

It  is  astonishing  to  note  the  manner  hi  which  otherwise  sensible 
men  will  put  into  effect  and  enforce  methods  and  policies  vitally 
affecting  the  workman's  daily  life,  without  regard  to  the  "  human 
element"  that  enters  into  his  makeup  and  that  the  manager  should 
know  must  of  necessity  be  reckoned  with. 

Much  has  been  said  about  the  tendency  of  the  modern  workman 
to  limit  his  output  and  not  put  forth  his  best  efforts  to  improve 
either  himself  or  the  company's  product.  This  complaint,  however, 
generally  comes  from  the  manufacturer  who  does  not  consider  it 
worth  while  to  give  close  attention  to  such  details  as  are  mentioned 
briefly  here.  Seldom  is  it  heard  from  the  manager  who  wisely 
"puts  himself  in  the  other  fellow's  place,"  and  then  builds  up  his 
plans  along  lines  that  he  realizes  would  mean  encouragement  and 
inspiration  to  him  were  he  in  that  other  fellow's  place. 

Any  man  who  has  sufficiently  clear  vision  to  recognize  such  faults 
existing  in  his  business  must  make  up  his  mind  to  start  right  in  at 
the  bottom  and  build  up.  No  points  can  be  neglected.  The  faults 
in  organization  and  methods  mentioned  in  this  brief  outline,  if 


FIRST   REQUISITES   IN   REORGANIZATION  19 

existing,  must  be  eradicated  before  any  permanent  or  really  effective 
improvement  can  result. 

II.    DEFECTS   OF  SYSTEMS  AND  METHODS  OF  MANU- 
FACTURING. 

It  is  not  my  intention  to  do  more  at  this  point  than  to  point  out 
the  most  serious  defects  of  the  ordinary  systems,  as  the  succeeding 
chapters  will  deal  with  the  defects  and  suggested  methods  of  better- 
ment quite  fully.  The  need  of  system  is,  of  course,  becoming  more 
widely  recognized  each  year.  But  hi  many  cases  the  manufacturer 
stops  just  short  of  full  success.  Many  times  he  also  fails  to  realize 
the  full  purport  of  his  system  and  to  reap  the  full,  and,  in  fact,  the 
greatest  benefit  possible  from  it. 

THE  STOCK  SYSTEM. 

To  the  manufacturer  who  is  not  thoroughly  awakened  to  modern 
possibilities,  the  stock  system  is  simply  a  means  of  keeping  track  of 
his  stock.  It  may  never  occur  to  him  that  it  is  possible  to  develop 
it  easily  so  that  he  can  cut  down  his  necessary  working  capital  to  a 
minimum  and  reduce  his  interest  account  to  the  lowest  point  possi- 
ble, or  that,  by  a  little  development  and  attention  on  the  part  of 
several  intelligent  men,  monthly  inventories  correct  within  1J  and 
2  per  cent  can  be  easily  secured  and  made  the  basis  for  an  exceedingly 
valuable  factory  profit-and-loss  sheet,  so  that  factory  conditions 
can  be  accurately  noted  monthly. 

THE  ORDER  AND  TRACING  SYSTEM. 

The  order  and  tracing  system  are  often  considered  "necessary 
evils,"  and  yet  the  great  success  of  many  a  concern  depends  upon  the 
promptness  in  filling  orders  and  keeping  delivery  promises,  and  the 
tracing  system  is  responsible  for  this. 

The  tracing  system  as  an  aid  hi  keeping  down  stock  investment 


20  PROFIT-MAKING   MANAGEMENT 

through  keeping  the  regular  stock  constantly  moving  is  also  often 
a  new  idea. 

THE  COST  SYSTEM. 

The  possibility  of  ascertaining  the  cost  of  the  article  is  often  the 
only  thought  in  the  manufacturer's  mind  when  the  "cost  system" 
is  mentioned,  and  is  accordingly  its  only  function  that  is  developed. 
In  fact,  however,  the  valuable  analyses  of  costs,  operation  by  opera- 
tion, to  be  secured  from  an  efficient  cost  system,  supply  the  manager 
with  invaluable  data  from  which  to  work  in  reducing  costs.  Nor  does 
then*  effectiveness  stop  here.  If  it  is  decided  to  start  a  campaign  to 
increase  the  efficiency  of  the  factory  force  and  to  eliminate  the  inef- 
ficient men,  then  the  individual  records  of  the  man  will  be  secured 
from  the  cost  records.  In  large  bodies  of  workmen,  a  steady  and 
intelligent  campaign  along  these  lines  will  work  wonders. 

While  to  some  this  last  point  may  appear  to  be  an  unnecessary 
refinement,  it  must  be  admitted  by  all  that  a  cost  system  must  pro- 
vide a  method  of  cost  analysis  which  will  unerringly  reveal  the  points 
of  high  and  excessive  costs  throughout  every  stage  of  manufacture. 
The  failure  to  accomplish  this  means  the  failure  of  the  chief  function 
of  any  cost  system,  namely,  making  possible  the  greatest  economy  in 
manufacture. 

Linked  up  closely  with  the  cost  system  is  the  "system  of  pay"  or 
the  wage  system  already  touched  upon.  This  will  be  handled  fully 
later,  but  must  be  mentioned  now  because  of  its  great  importance. 
It,  and  the  "method  of  organization,"  form  the  two  pillars  upon 
which  rest  the  whole  framework  of  a  successful  concern.  Any  weak- 
ness here  is  felt  throughout  the  entire  structure. 

MACHINING  METHODS. 

Closely  linked  up  with  the  cost  system  and  wage  system  are  the 
shop  processes  of  production,  such  as  machining,  assembling,  etc. 
The  lack  of  system  in  the  first  two  almost  invariably  means  a 


FIKST   REQUISITES   IN  REORGANIZATION  21 

deplorable  lack  of  proper  results  in  the  shop  processes  of  production. 
The  lack  of  accurate  information  relative  to  the  amount  of  work  that 
can  and  should  be  turned  out  from  a  first-class  tool  is  astounding. 
In  many  shops  it  is  only  another  case  where  those  methods  which 
vitally  affect  the  cost  of  production  are  "up  to  the  foremen,"  and 
the  foremen,  lacking  knowledge  and  experience,  cheerfully  run  their 
departments  year  in  and  year  out,  satisfied  if  they  turn  out  sufficient 
volume  to  keep  the  "super"  off  then-  trail. 

In  my  own  shops  before  they  were  reorganized  I  have  seen  cases 
where  one  department  was  operating  the  machinery  at  such  cutting 
speeds  and  with  such  depths  of  cut  as  to  show  a  loss  of  21  per  cent 
when  compared  with  another  department  directly  beside  it  but  under 
another  foreman.  And,  at  that,  both  departments  were  far  below 
the  standard  of  efficiency  they  have  now  attained,  and  the  end  has 
not  yet  been  reached. 

In  this  matter  understand  me  clearly.  The  average  foreman  wants 
to  do  well  and  to  make  a  good  showing.  But  he  cannot  but  lack  the 
desired  (and  indeed  necessary)  training  and  experience  to  secure 
proper  results.  The  only  proper  method  of  handling  these  men  is 
to  train  them.  It  can  be  done.  It  has  been  done  with  fine  results. 
Necessarily,  then,  this  vital  information  as  to  what  should  be  pro- 
duced from  any  one  machine  is  usually  lacking  "hi  the  front  office." 

I  recently  installed  hi  certain  factories  several  large  boring  mills 
and  heavy  planers  built  by  two  of  the  highest  grades  of  manufac- 
turers. In  order  to  test  the  amount  of  knowledge  possessed  by  the 
manufacturers  of  these  machines,  they  were  called  upon  for  advice 
as  to  the  best  results  that  could  be  secured  from  them  when  working 
under  differing  conditions.  Simple  questions  were  asked  as  to  the 
speed  and  depth  of  cut  possible  in  order  to  secure  the  best  results. 
These  builders  of  the  tools  could  not  give  a  definite  answer  that 
would  be  of  any  material  assistance  to  any  one  needing  light.  They 
knew  that  their  machine  tools  ran  as  fast  and  "  would  turn  out  as 
much  work,  etc.,"  as  any  in  the  market,  but  when  it  came  to  the 


PKOFIT-MAKING  MANAGEMENT 

question  of  shapes  of  tools,  depth  of  cuts,  results  upon  differing 
grades  of  metal,  results  from  the  use  of  water  and  composition  on 
the  tool,  etc.,  they  floundered  hopelessly.  The  lack  of  knowledge 
of  the  best  results  obtainable  is  not  by  any  means  confined  to  the 
older  type  of  shops.  There  is  many  a  factory  today  which  to  the 
eye  presents  a  modern  appearance,  with  its  new  buildings,  well  venti- 
lated and  cleanly,  its  fine  equipment  hi  machinery  and  tools,  and  its 
show  of  bustle  and  hustle,  which  yet  needs  the  "  doctor's  care"  badly. 
The  shop,  whether  new  or  old  in  appearance,  operating  under  the 
older  methods  of  obsolete  of  obsolescent  wage  and  shop  systems, 
hampered  by  lack  of  accurate  knowledge  of  best  obtainable  results 
in  up-to-date  processes  of  production,  by  lack  of  progressiveness 
and  lack  of  "pulling  for  the  good  of  the  company"  spirit  in  the  work- 
ing organization,  is  far  behind  in  the  race  for  commercial  supremacy. 

III.    DEFECTS  OF  SALES  DEPARTMENT  AND  EXECUTIVE. 

THE  SALES  DEPARTMENT. 

Thorough  and  careful  consideration  of  sales-department  methods 
is  considered  essential  hi  this  discussion.  A  full  study  of  any  business 
is  incomplete  if  the  sales-department  methods  are  neglected.  For 
the  "production  of  orders"  is  a  most  essential  link  to  the  chain. 

The  possibilities  of  scientific  development  in  this  branch  of  the 
ordinary  business  are  so  great  that  they  must  be  carefully  studied. 
To  this  statement  I  often  hear  the  manager  say :  "  Scientific  develop- 
ment of  the  selling  end  of  the  business!  Why!  a  salesman  is  a  sales- 
man. The  selling  of  the  goods  is  an  art  in  itself.  A  matter  of 
individualism.  Salesmen  are  born,  not  made.  Training  of  sales- 
men! Bosh!" 

The  managers  who  make  such  statements  are  usually  of  the  type 
that  will  employ  a  new  salesman,  let  him  "  dig  around  the  shop  a  bit," 
give  him  a  catalogue  and  start  him  out.  A  mere  "  taking  of  orders 
on  price  alone,"  not  a  finished  salesman.  For  the  gulf  of  difference 


FIRST   REQUISITES   IN    REORGANIZATION  23 

between  a  man  who  takes  orders  because  he  quotes  lower  prices  than 
his  competitor,  and  the  salesman  who  sells  the  goods  at  a  higher 
price  than  his  competitor  because  of  his  skill  and  knowledge  of  his 
business,  is  a  very  wide  and  deep  one.  That  there  is  a  "  psychology 
of  salesmanship"  I  would  be  the  last  one  to  deny.  But  innate  selling 
ability,  unless  backed  up  by  proper  knowledge,  will  not  win.  Add 
to  natural  selling  ability  a  thorough  training  in  the  "  talking  points" 
of  the  product,  the  defects  (and  good  points)  of  the  competitors, 
the  best  methods  of  meeting  arguments  and  objections,  gained  from 
the  experience  of  all  the  best  men  in  the  selling  organization,  the 
most  successful  means  of  demonstrating  the  merits  of  the  goods  to 
the  prospective  customer — and  you  have  a  strong  salesman. 

Train  your  men  collectively,  thoroughly  organize  them  along 
scientific  lines,  and  then  back  up  your  training  by  simple  yet  ade- 
quate systems  whereby  you  may  know  that  the  territories  are  being 
completely  covered,  your  prospective  customers  are  being  handled 
properly,  profitable  prices  being  secured  and  competition  being  met, 
and  you  will  have  an  invincible  selling  organization. 

Instead  of  this  condition,  one  often  sees  a  group  of  salesmen, 
jealous  and  distrustful  of  each  other,  lacking  hi  the  desire  to  work 
together  for  the  good  of  the  company,  without  a  thorough  knowledge 
of  the  company's  goods  or  their  competitors'  product,  and  very 
chary  about  sharing  what  knowledge  they  do  possess  either  with 
each  other  or  with  the  poor  newcomer.  Usually  the  firm  itself  is 
almost  entirely  responsible  for  such  conditions. 

The  possibilities  that  lie  hi  the  development  of  proper  methods  are 
astounding.  Actual  experience  to  be  described  in  later  chapters 
has  proven  it  beyond  the  peradventure  of  a  doubt. 

THE  EXECUTIVE. 

The  weaknesses  outlined  in  the  preceding  pages  will  surely  be 
felt  hi  the  executive  division  whether  that  consists  of  one  man  or 
twenty.  With  the  possibility  of  securing  only  such  insufficient 


24  PROFIT-MAKING    MANAGEMENT 

data  as  can  be  obtained  with  lack  of  organization,  methods,  and 
systems,  such  as  has  been  outlined,  what  can  the  executive  do  but 
struggle  along  hi  the  dark  and  hi  doubt,  trusting  that  his  untrained 
salesmen  can  sell  his  product  for  such  a  price  that  a  reasonable  profit 
will  be  shown  after  his  factory,  without  proper  organization,  sys- 
tem, and  training,  has  produced?  In  passing,  let  me  state  again  that 
there  is  many  an  executive  today  who,  not  realizing  the  ineffi- 
cient condition  of  both  branches  of  the  organization,  wonders  what 
there  is  wrong  with  a  business  that  apparently  is  in  good  condition 
as  far  as  surface  conditions  are  concerned.  To  such  I  say  analyze 
the  business  to  the  uttermost.  Compare  it  with  a  modern  concern 
with  an  organization  built  upon  lines  that  inspire  the  workers  in  it 
to  give  their  best  knowledge  and  ability  to  further  its  progress, 
with  methods  that  ensure  the  best  results  in  cost  and  volume,  and 
systems  that  will  not  only  tell  the  story  of  progress  but  also  indicate 
the  "Sticking  Points" — and  then  begin  to  build  along  proper  lines. 
And  when  the  work  is  once  begun,  never  let  up;  fight  it  out  to  a 
finish.  It  will  pay. 


CHAPTER  II. 
THE  PRACTICAL  WORKING  OF  THE  COMMITTEE  SYSTEM. 

/CONSIDERATION  of  methods  for  "curing  industrial  ineffi- 
^^  ciency,"  or  for  increasing  such  efficiency  as  we  may  already 
have  in  the  factory,  will  be  much  simplified  if  we  keep  hi  mind  the 
classification  of  defects  given  hi  the  preceding  chapter.  If  we  get 
the  causes  of  loss  clearly  recognized  and  logically  grouped  for  study, 
we  can  easily  see  what  must  be  done  (and  what  must  not  be  done)  to 
change  these  harmful  conditions  and  to  secure  the  much  desired 
improvement. 

This  classification  of  the  sources  of  loss  and  waste  in  a  manufac- 
turing business  was : — 

1. — Defects  of  factory  organization — of  the  superintendent,  the  fore- 
men, the  job  bosses,  and  the  usual  methods  of  management. 

2. — Defects  of  manufacturing  systems  and  shop  methods. 

3. — Defects  of  the  sales  organization  and  sales  methods,  and  of 
executive  control  over  the  entire  business. 

Let  us  understand  fully  at  the  outset  that  there  is  no  infallible 
panacea — no  ready-made  "system"  which  will  fit  all  cases  alike. 
Methods  must  be  suited  to  the  circumstances  of  the  particular  shop 
or  department.  The  first  thought  hi  regard  to  any  plan,  indeed, 
must  relate  to  its  adaptability  to  existing  conditions  and  processes, 
and  to  the  character  and  ability  of  the  existing  men  hi  the  organiza- 
tion. Their  sympathetic  support  must  be  secured,  whether  the  new 
plans  affect  methods  of  organization,  systems,  or  shop  processes. 
The  most  thorough  and  effective  system  hi  existence  will  not  bring 
the  degree  of  success  that  should  be  attained  unless  it  is  supported 
by  superintendent,  foremen,  and  job  bosses — and  workmen.  I  hap- 

25 


26  PROFIT-MAKING    MANAGEMENT 

pen  to  know  of  five  cases,  of  importance  because  of  the  size  of 
the  concern  and  the  thousands  of  dollars  that  were  wasted,  where  this 
mistake  was  made  and  failure  resulted. 

The  new  systems  all  "cut  and  dried/'  were  figured  out  carefully 
"on  paper/'  new  printed  forms  were  prepared,  the  old  forms  de- 
stroyed, and  the  start  made.  The  men  introducing  them,  desiring 
to  retain  the  full  credit  and  glory  for  the  innovation,  made  the  mis- 
take of  refusing  to  call  hi  the  different  members  of  the  organization 
and  trying  to  secure  their  support,  but  instead  attempted  to  force 
their  pet  plans  through.  They  met  with  instant  though  covert 
opposition.  Unexpected  obstacles  suddenly  blocked  the  way — ob- 
stacles not  apparent  to  the  investigator,  but  which  lay  hidden 
away  amongst  existing  shop  processes  and  methods  that  could  not 
be  changed,  waiting  to  spring  up  and  prevent  the  longed  for  pro- 
gress— all  of  this  to  the  delight  of  the  men  in  the  departments,  who 
chuckled  to  themselves  (and  to  each  other)  because  of  trouble  arising 
from  some  difficulty  with  which  they  were  thoroughly  acquainted, 
but  concerning  which  they  said  nothing  "because  they  weren't 
asked." 

In  one  case  in  particular  where  the  system  required  an  especially 
large  expenditure,  its  introduction  was  apparently  successful  though 
accomplished  after  many  a  hard  wrench  and  pull.  However,  this 
apparent  success  lasted  only  so  long  as  the  devisers  of  the  plan  were 
on  the  ground  to  see  that  its  vital  points  were  not  neglected,  its 
essential  features  not  abandoned.  But  when  they  left  the  shop  and 
their  pet  system  to  the  tender  care  of  the  old  organization,  there 
began  a  process  of  disintegration,  imperceptible  but  effectual.  The 
tendency  of  the  workers  to  abandon  gradually  methods  with  which 
they  possibly  were  not  altogether  familiar,  and  certainly  not  in 
sympathy,  was  practically  irresistible.  Little  by  little  they  slipped 
back,  giving  up  one  idea  after  another,  until  the  result  was  a  hetero- 
geneous mass  of  methods,  part  belonging  to  the  new  system,  part  to 
the  old,  the  final  condition  being  worse  than  the  first. 


THE    COMMITTEE    SYSTEM  27 

Oftentimes  lack  of  knowledge  of  details  leads  a  manufacturer  to 
entrust  the  important  work  of  reorganization  to  those  who  can  talk 
the  loudest  and  make  the  greatest  show  of  a  little  knowledge.  So 
important  is  this  work,  however,  that  it  may  well  claim  the  closest 
attention  on  the  part  of  the  manager  himself.  The  "show  me" 
attitude  is  nowhere  so  important.  If  you  don't  know  or  under- 
stand, stay  with  the  problem  until  you  do.  Don't  let  anyone  else 
decide  these  important  things  for  you. 

The  support,  the  co-operation,  of  the  men  forming  your  organiza- 
tion is,  then,  essential.  To  enlist  it,  they  must  have  some  part  in 
forming  the  plans,  some  share  hi  devising  the  systems.  They  must 
be  made  to  feel  that  the  methods  are  their  own.  They  must  be  con- 
sulted frequently  and  thoroughly  concerning  the  difficulties  and 
encouraged  to  suggest  ways  of  overcoming  them.  If  some  com- 
prehensive plan  that  will  ensure  this  result — such,  for  example,  as 
the  committee  system — can  be  worked  out  and  put  into  effect,  the 
difficulties  will  quickly  disappear  and  ways  and  means  for  over- 
coming the  "unexpected  obstacles"  will  soon  be  found. 
.  With  these  fundamental  principles  clearly  in  view — (1)  that  re- 
organization plans  must  be  adaptable  to  the  conditions  of  the 
business,  and  (2)  that  they  must  enlist  the  co-operation  of  the 
personnel — we  may  lay  down  three  ruling  ideas  which  must  govern 
the  manufacturer  in  introducing  new  profit-making  methods  into 
his  factory: — 

1. — All  plans  must  be  based  primarily  upon  recognition  of  the 
human  element  of  the  men  who  are  affected.  Always  keep  in  mind 
this:  "How  would  I  act  were  I  in  the  other  fellow's  place,  with  his 
limitations  of  knowledge  and  experience,  and  what  plans  would  be 
most  likely  to  elicit  my  support,  develop  my  latent  ability,  and  bring 
out  the  best  that  is  in  me  for  the  support  of  the  company?" 

2. — The  plans  must  be  developed  along  the  lines  of  the  modern 
"get-together  spirit."  The  facts  must  be  recognized  that,  nine 
times  out  of  ten,  the  joint  advice  of  five  men  conversant  with  a  sub- 


28  PROFIT-MAKING    MANAGEMENT 

ject  is  immeasurably  superior  to  any  plan  developed  from  one 
man's  brain;  that  the  only  possible  method  of  developing  a  proper 
shop  spirit  is  through  getting  the  men  together;  that  you  can  elimi- 
nate their  distrust  and  jealousy  of  each  other  only  by  bringing  them 
into  close  contact  one  with  another,  handling  them  tactfully  and 
showing  them  they  are  "not  such  bad  fellows  after  all,"  that  the 
spirit  of  "helping  one  another  for  the  good  of  the  company"  can 
only  be  brought  forth  through  the  spirit  that  develops  from  coming 
together;  that  the  feeling  of  concerted  action  on  subjects  vital  to  the 
company's  welfare  can  be  cultivated — gradually,  perhaps,  but 
easily — if  the  proper  attention  is  paid  to  it. 

3. — Thoroughly  developed  methods  of  overseeing  and  checking 
up  production  conditions,  both  as  to  volume  and  costs,  are  vital. 
System  provides  these  for  the  management.  The  heads  of  a  con- 
cern cannot  see  everything,  but  they  must  come  "mighty  near 
knowing  everything/'  or  at  least  be  in  a  position  to  scent  danger, 
locate  it,  and  eradicate  its  cause  promptly. 

Hence  the  systems  for  the  factory,  sales,  and  executive  divisions 
must  be  developed  with  the  idea  of  providing  the  heads  of  a  con- 
cern with  accurate  methods  of  overseeing  the  entire  company; 
systems  which  will  provide  an  executive,  possibly  totally  ignorant 
of  factory  or  sales  processes,  with  data  sufficient  to  enable  him  to 
lay  his  finger  on  the  "Sticking  Point,"  whether  it  be  excessive  costs, 
overproduction,  delayed  shipments,  or  unprofitable  sales. 

FORMATION  OF  THE  COMMITTEE  SYSTEM. 

And  now  we  come  to  the  initial  step — concrete,  definite,  and  sim- 
ple— by  which  the  human  factor  is  recognized,  the  spirit  of  co-opera- 
tion is  fostered,  and  the  idea  of  order  and  system  is  implanted. 

It  is  evident  that  there  is  but  one  way  to  secure  the  advice  on  vex- 
ing problems  of  those  best  qualified  to  counsel,  and  also  to  stimu- 
late these  men  to  give  the  company  the  best  that  is  in  them.  That 
is  by  forming  "Standing  Committees,"  to  handle  matters  pertaining 


THE   COMMITTEE   SYSTEM  29 

to  routine  production  and  to  solve  other  important  problems  such 
as  those  relating  to  progress,  invention,  and  economies  in  production, 
and  promotions. 

In  each  factory  the  problems  relating  to  the  foremen  who  would 
naturally  form  the  committees,  and  to  the  work,  vary  so  as  to  make 
any  hard  and  fast  rules  out  of  the  question.  But  in  ninety-nine 
cases  out  of  a  hundred  the  factory  superintendent,  naturally  the 
final  authority  hi  all  cases,  should  be  the  chairman  of  the  most 
important  committees.  In  the  case  of  large  concerns,  where  the 
superintendent  would  naturally  have  several  assistants,  these  may 
be  the  heads  of  the  less  important  committees,  though  in  many  cases 
the  work  of  the  committees  renders  the  assistant  unnecessary.  The 
superintendent  himself  in  all  cases,  however,  should  be  the  head  of 
the  Main  Factory  Committee. 

I  find  that  six  men  form  the  ideal  committee  as  to  size.  Any  larger 
number  than  this  is  liable  to  prove  unwieldy. 

These  committees  are  in  all  cases  of  an  advisory  character. 

THE  GENERAL  FACTORY  COMMITTEE. 

There  should  be  first  a  General  Factory  Committee,  with  the 
superintendent  as  chairman,  formed  to  care  for  the  most  important 
questions  arising  in  a  shop.  The  members  of  this  committee  should 
be  selected  with  great  care,  and  with  a  view  to  having  the  brighest, 
most  progressive  men  in  the  shop  upon  it.  While  of  course  it  is 
advisable  to  consider  the  character  of  departmental  work  in  charge 
of  the  different  men  when  making  the  selection,  so  as  to  have  experi 
enced  men  on  the  committee,  at  the  same  time  a  serious  mistake 
will  be  made  if  this  is  the  only  point  observed  when  choosing  them. 
Ordinarily,  the  personnel  may  well  consist  of  the  chief  designer  of 
product,  the  chief  designer  of  tools  or  the  head  of  the  tool  room 
(preferably  the  latter),  the  head  of  the  cost  department,  and  two  or 
possibly  three  foremen.  In  the  case  of  assistants,  these  should 
form  part  of  the  committee.  They,  however,  should  not  take  the 


30  PROFIT-MAKING    MANAGEMENT 

place  of  the  foremen,  even,  if  it  be  necessary  to  increase  the  number  on 
the  committee.  Accurate  notes  of  actions  taken  are  of  course 
necessary.  A  capable  stenographer  to  act  as  secretary  is  always  a 
valuable  adjunct.  Further,  an  efficient  secretary  can  straighten 
out  many  a  difficulty  between  meetings,  and  the  knowledge  of  shop 
conditions  he  absorbs  is  of  great  value. 

Work  of  this  Committee. — As  stated  before,  no  hard  and  fast 
rules  can  be  laid  down  relative  to  the  work  of  this  committee;  but, 
generally  speaking,  it  can  well  consist  of  the  following : — 

1. — Plans  to  standardize  product,  and  consideration  of  new 
methods  of  design. 

2. — Consideration  of  actual  progress  made  upon  new  ideas  already 
introduced  into  the  factory.  (A  most  important  subject;  for  the 
way  in  which  valuable  ideas,  bravely  begun,  can  be  totally  buried 
and  lost  sight  of  in  the  press  for  the  necessary  everyday  output,  is 
often  discouraging.) 

3. — Consideration  of  possible  economies  and  the  systematic  plan- 
ning of  reduction  in  cost.  The  mere  starting  of  a  general  discus- 
sion often  opens  up  a  surprisingly  large  field  for  this  highly  import- 
ant work.  Reports  by  foremen  upon  economies,  decided  upon  at 
previous  meetings,  and  assigned  to  them  to  put  into  effect,  should 
invariably  be  required. 

4. — Consideration  of  routine  work,  both  stock  and  contract,  and  of 
progress  upon  it.  Thorough  weekly  reports  fully  covering  this 
subject  are  of  the  greatest  importance. 

5. — Promotions.  While  naturally  the  superintendent  should  be 
the  final  authority  to  act  upon  promotions,  the  plan  of  having  this 
committee  pass  upon  them  in  an  advisory  manner  proves  most 
salutary.  Not  only  is  the  management  thus  assured  of  the  best 
possible  selection  of  men  for  important  positions,  but  also  the  worker 
far  down  in  the  ranks  will  feel  the  effect  of  appointments  based  upon 
merit,  and  free  from  any  taint  of  unfair  influences  of  relationship  or 
personal  friendship.  , 


THE   COMMITTEE   SYSTEM  31 

Meetings. — The  number  of  meetings  to  be  held  will  depend  upon 
the  character  of  the  business — usually  two  a  week  will  suffice.  But 
one  point  should  be  insisted  upon:  There  should  be  stated  times  for 
these  meetings  and  nothing  should  be  allowed  to  interfere  with  them. 
The  tendency  to  slight  the  meetings  after  the  plan  has  been  hi  effect 
for  a  time  and  has  straightened  out  the  kinks  is  very  strong. 

SUBSIDIARY  COMMITTEES. 

Most  companies  manufacture  several  different  lines  of  product, 
or  a  number  of  important  variations  upon  this  product.  Each  line 
should  have  its  own  committee. 

The  men  forming  the  Factory  Committee  should  act  as  chairmen 
of  these  different  Subsidiary  Committees,  their  selection  being  deter- 
mined by  the  character  of  their  work  and  their  experience.  Each 
committee  should  be  made  up  of  the  foremen  handling  that  particu- 
lar line  of  product.  Very  often  other  members  of  the  Factory  Com- 
mittee, and  especially  the  tool  designer  or  tool-room  foreman  and 
cost  man,  should  be  called  into  these  meetings,  where  possibly  the 
same  stenographer  should  act  as  secretary  as  in  the  case  of  the 
Factory  Committee.  At  first  glance,  this  may  seem  an  unimportant 
point;  but  it  is  not  so,  by  any  means,  when  you  consider  how  much 
information  of  great  value  to  a  first-class  superintendent  a  bright 
man  in  this  position  will  absorb. 

Work  of  these  Committees. — While  the  work  of  each  of  these 
committees  is  naturally  restricted  to  the  details  connected  with  one 
branch  of  production,  still  the  work  done  by  the  Factory  Committee 
as  applied  to  that  particular  line  will  naturally  be  handled  by  it. 
Important  matters  for  consideration  would  be : — 

1. — Standardization  and  new  designs. 

2. — Progress  on  new  ideas  already  introduced,  with  reports  from 
the  foremen  responsible  for  pushing  them. 

3. — Consideration  of  possible  economies  and  reduction  in  costs. 
Full  reports  from  foremen  upon  assignments  relating  to  this  work. 


32  PROFIT-MAKING    MANAGEMENT 

4— Routine  work,  its  condition  and  progress,  with  reports  from 
foremen  responsible,  showing  whether  or  not  each  job,  be  it  stock 
or  special  contract,  is  making  proper  progress  so  as  to  meet  delivery 
dates. 

JOB  BOSSES'  MEETING. 

Naturally,  the  next  step  is  that  the  foremen  shall  hold  meetings 
with  the  job  bosses.  Some  may  think  this  an  unnecessary  refine- 
ment of  the  committee  system.  I  regard  it  as  an  important  link  in 
the  chain.  Naturally,  these  men  cannot  be  taken  away  from  their 
work  very  often  without  crippling  the  output;  but  short  and  sharp 
meetings  with  them  every  two  weeks  are  strongly  advisable,  for 
necessarily  upon  these  men  ultimately  falls  the  responsibility  for 
pulling  many  a  project  through  successfully.  Many  a  cherished 
plan  of  great  importance  evolved  by  the  head  of  the  company  will 
succeed  only  through  their  help;  many  a  one  will  fail  because  of 
their  opposition.  Never  forget,  either,  that  these  men  are  the  back- 
bone of  the  shop  in  labor  troubles.  They  are  the  future  foremen, 
and  the  development  of  the  best  ones  amongst  them  is  of  prime 
importance. 

GENERAL  FOREMEN'S  MEETING. 

A  general  "  Foremen's  Meeting"  should  be  held  once  a  month. 
In  addition  to  the  attendance  of  the  foreman  and  assistant  foremen, 
the  presence  of  the  members  of  the  Factory  Committee  and  of  the 
superintendent  should  be  required.  Indeed,  the  presence  of  at 
least  one  of  the  higher  officials  of  the  company  is  advisable. 

At  these  meetings  the  heads  of  the  several  committees  should 
touch  upon  the  important  problems  before  their  particular  committee 
requiring  solution.  Many  points  relating  to  progress  of  important 
work  can  be  profitably  discussed.  Each  man  should  invariably  be 
required  to  make  a  statement  as  to  the  condition  of  his  own  depart- 
ment, a  statement  whether  or  not  he  or  his  department  is  responsible 
for  any  delays  or  trouble  in  any  other  departments,  and  a  further 


THE    COMMITTEE    SYSTEM  33 

statement  as  to  whether  or  not  any  other  department  is  causing  him 
or  his  department  difficulty  of  any  character.  With  the  knowledge 
that  they  cannot  deceive  the  well-informed  committeemen  before 
them,  such  a  method  of  procedure  soon  develops  many  an  interest- 
ing situation,  and  leads  to  the  discovery  of  many  a  "  Sticking  Point." 
The  discussion  that  naturally  ensues  soon  leads  to  definite  plans  for 
the  overcoming  of  these  difficulties. 

A  most  profitable  part  of  this  meeting  is  a  discussion  of  depart- 
mental records  for  the  past  month.  These  records  can  include  such 
subjects  as  " Economies  Effected,"  "Costs  Reduced,"  " Suggestions 
for  Improvement,"  "Production  Records,"  "Departmental  Ex- 
penses," and  many  others  of  an  intensely  practical  and  bene- 
ficial character. 

You  may  be  sure  that  each  and  every  foreman  will  strive  to  his 
uttermost  to  present  a  clean  slate,  a  good  record,  if  he  knows  that 
such  departmental  records  will  be  openly  discussed  before  his  fellow 
foremen,  the  committeemen,  the  superintendent,  and  other  officers 
of  the  company.  I  recall  very  forcibly  my  own  animated  and  de- 
termined efforts  to  present  a  good  record  before  such  an  audience, 
when  I  was  the  head  of  important  divisions  of  work  in  several  large 
manufacturing  concerns.  The  existence  of  this  spirit  amongst  the 
other  heads  of  departments  was  also  very  evident.  The  average 
foreman  can  present  to  any  one  man  his  side  of  any  story  very 
skilfully.  It  is  an  entirely  different  matter,  however,  to  tell  the 
same  story  before  a  body  such  as  I  have  described.  It  must  be 
absolutely  correct,  or  it  will  be  instantly  contradicted. 

In  presenting  matters  before  these  bodies,  very  effective  use  can 
be  made  of  folding  blackboards.  I  continually  use  a  type  containing 
ten  leaves,  each  leaf  36  by  28  inches.  These  fold  together  like  a 
book.  The  entire  set  can  be  closed,  and  a  lock  placed  on  the  cover. 
Their  value  is  apparent.  As  our  men  often  say,  "  nothing  gets  away 
from  that  blamed  blackboard."  An  order  from  the  executive  to 
consider  and  bring  through  to  success  any  certain  plan  is  placed  upon 


34  PROFIT-MAKING    MANAGEMENT 

the  board  and  certain  portions  of  the  work  are  assigned  to  different 
men,  these  assignments  being  noted  upon  the  board.  There  each 
stays  until  it  is  accomplished.  It  has  always  been  of  much  interest  to 
me  to  note  the  effect  upon  the  foremen.  The  thought  that  "  that 
blackboard"  contains  these  data,  and  that  in  four  weeks  it  will 
appear  staring  them  in  the  face,  always  worries  them,  and  arouses 
their  determination  to  accomplish  the  task  so  as  to  have  it  "  rubbed 
off  the  slate."  I  receive  reports  right  "  from  the  blackboard"  show- 
ing progress  made  or  lack  of  it.  The  average  manager  needs  no  assur- 
ance as  to  the  effectiveness  of  such  a  plan.  It  is  a  wonder  worker. 

THE  WORKMEN. 

That  this  committee  system  has  a  good  effect  upon  the  workmen 
cannot  be  denied.  They  are  undoubtedly  affected  by  it.  The  posi- 
tion of  job  boss  becomes  a  more  attractive  prize  to  strive  for.  They 
soon  see,  too,  that  under  such  a  system  unfair  selections  to  such  a 
position  by  the  foremen  become  very  rare,  inasmuch  as  a  foreman 
will  seldom  risk  recommending  a  man  to  the  Factory  Committee 
for  promotion  on  any  basis  other  than  that  of  merit.  The  danger 
of  being  caught  is  too  great;  and  then  again,  the  rivalry  between 
departments  becomes  such  that  the  foreman  very  soon  learns  that 
he  cannot  afford  to  take  such  action,  because  he  thereby  immediately 
affects  the  efficiency  of  his  department.  He  soon  learns  that  under 
such  methods  inefficiency  becomes  apparent  at  an  astonishingly 
early  date. 

I  do  not  intend  to  deal  at  this  point  with  a  comprehensive  plan 
for  increasing  the  efficiency  of  the  working  force,  for  a  thorough 
consideration  of  many  other  practical  points,  such  as  wage  system, 
rate  of  pay,  sanitary  conditions,  etc.,  is  first  necessary;  but  it  is 
necessary  to  emphasize  the  fact  that  some  such  plan  as  that  outlined  is 
absolutely  necessary  as  a  foundation  to  work  upon;  for  you  must  give 
the  worker  "his  chance"  to  advance  in  fair  competition  with  others 
in  order  to  develop  his  latent  efficiency. 


THE    COMMITTEE    SYSTEM  35 

Again,  such  a  system  assures  the  company  that  any  policy  affect- 
ing its  workmen,  which  it  desires  carried  out,  will  be  carried  out. 
I  have  often  seen  the  humanitarian,  fair-minded  policy  of  the  man- 
ager of  a  business  so  mangled,  twisted,  and  torn  out  of  shape  by 
superintendent,  foremen,  assistant  foremen,  and  job  bosses,  that 
its  original  owner  would  never  recognize  it  by  the  time  it  reached  the 
men  and  began  to  affect  their  daily  life. 

Such  a  system  cannot  be  equalled  as,  first,  a  discoverer,  and  sec- 
ond, a  developer,  of  the  strong  men  in  the  organization.  After 
all,  success  in  any  project  is  only  a  question  "of  the  right  man," 
first,  last  and  all  the  time.  Consider  how  enormous  is  the  practical 
benefit!  What  a  method  for  pushing  improvements,  for  controlling 
production  so  as  to  meet  dates,  for  reducing  costs,  and,  last  but  by 
no  means  least,  for  inspiring  the  foremen,  job  bosses,  and  workmen 
to  do  their  best,  through  their  natural  ambition,  under  a  system  that 
provides  them  with  a  chance  to  show  their  worth !  How  they  will 
grow  and  expand  under  such  conditions!  The  words  esprit  de  corps, 
and  "  working  for  the  good  of  the  company,'7  are  no  longer  empty 
phrases,  but  are  illustrative  of  a  spirit  of  enthusiasm,  of  good  fellow- 
ship, and  of  determination  to  do  their  level  best,  which  constitutes 
the  best  asset  the  company  has,  and  the  greatest  and  strongest  force 
that  tends  toward  success. 


CHAPTER  III. 
REPORTS;  THEIR  NECESSITY—  AND  THEIR  USES. 


secrets  of  cheap  production!"  The  secrets  that  every 
manufacturer  ardently  desires  to  discover;  that  every 
wide-awake  maker  of  manufactured  articles  wants  to  adapt  to  his 
own  business! 

The  place  of  first  importance  in  all  the  methods  and  processes 
that  will  be  considered  in  this  series  must  be  given  to  the  comprehen- 
sive Committee  System  which  has  been  fully  treated  in  the  two  pre- 
ceding chapters.  While  the  consideration  of  ways  and  means  of 
increasing  output,  lowering  cost,  and  improving  quality  leads  us 
through  a  discussion  of  the  several  lines  of  department  activities  of  a 
well  organized  business,  the  underlying  principles  of  the  "  Committee 
System  of  Management"  will  be  constantly  referred  to,  and  the  great 
effectiveness  of  this  system  will  be  constantly  employed  to  help  us 
in  solving  many  an  intricate  problem  of  management,  method,  or 
processes.  Knowing  so  well  its  tremendous  benefits  in  the  develop- 
ment and  management  of  large  industrial  enterprises,  I  consider  it 
the  best,  and,  in  fact,  the  only,  foundation  upon  which  to  build  a 
thorough  plan  for  reviving  a  run-down  concern,  or  for  developing 
even  a  well  organized  business  to  its  fullest  power  and  possibilities 
of  profit. 

The  work  of  the  committees  as  outlined  will  however  be  immensely 
expedited  if  material  for  their  deliberations  is  ready  in  written  form 
—  if  there  is  "something  before  the  court"  at  once  upon  its  assembly. 
The  result  of  their  consultation  also  should  often  be  permanently 
recorded.  And  the  data  of  progress  throughout  the  factory  must 
come  in  concise  expression  to  the  manager's  desk.  The  necessity 

36 


FACTORY   AND   SALES   REPORTS  37 

for  comprehensive  reports  of  varied  character  is,  therefore,  obvious. 
The  exact  character  of  these  reports  and  the  ground  that  should 
be  covered  therein  is  not  always  so  obvious.  In  fact,  seldom  is 
there  found  a  system  of  reports  that  is  really  comprehensive  and 
logical. 

Any  attempt  to  define  a  system  of  this  character  must  be  at  first 
general  in  character  because  of  the  differing  conditions  in  each 
business.  I  have,  however,  applied  the  fundamental  ideas  explained 
below  to  a  number  of  lines,  and  have  never  yet  failed  to  make  a 
practical  application  of  their  meritorious  features,  although  their 
form  was  greatly  changed. 

In  developing  such  a  line  of  reports,  let  us  begin  by  considering 
what  we  need  in  the  way  of  methods  to  increase  the  working  effi- 
ciency of  the  concern,  and  what  will  enable  us  to  oversee  and  check 
up  thoroughly  both  production  and  sales  conditions.  First,  then, 
we  want  methods  for  determining  what  must  be  accomplished  in  the 
production  division — in  the  character,  regularity,  and  volume  of 
output,  in  the  cost  of  production,  in  the  development  of  new  ideas 
or  inventions  to  conquer  competition,  in  the  steady  development 
of  greater  efficiency  and  reduction  of  costs.  Second,  we  want 
methods  for  determining  what  volume  of  business  must  be  secured, 
and  what  profit  must  be  obtained,  on  each  and  every  class  of  goods 
manufactured,  in  each  selling  territory ;  what  expense  can  be  allowed 
to  pile  up  while  the  goods  are  being  placed  upon  the  market.  Next, 
we  need  methods  by  which  the  selling  organization  can  be  forced  to 
meet  these  requirements  and  bring  the  necessary  results. 

In  short,  we  must  have  plans  and  methods  by  which  the  manu- 
facturer can  first  get  a  clear  conception  of  what  should  be  accom- 
plished hi  each  division  of  his  business;  and  next,  means  by  which 
he  can  get  a  firm  grasp  upon  the  details  of  his  business  so  as  to  force 
the  accomplishing  of  these  longed-for  results. 

In  general  outline  the  reports  must  be : — the  "  Monthly  Analyzed 
Profit  and  Loss  Sheet,"  the  "  Sales  Reports/'  the  "  Factory  Reports" 

• 


38  PROFIT-MAKING    MANAGEMENT 

and  the  "Cost  Reports."     All  will  be  more  fully  outlined  as  the 
discussion  develops,  but  the  scope  may  be  outlined  as  follows: — 

THE  MONTHLY  ANALYZED  PROFIT  AND  Loss  SHEET. 

This  report  should  show: — 

a.  Delivered  sales,  with  proper  divisions  for  each  class  of  goods 
produced,  and  receipts  of  other  character. 

b.  The  factory  cost  of  the  goods  in  each  division. 

c.  '  The  cost  of  delivery,  including  freight  and  cartages  properly 
classified. 

d.  The  receipts  and  disbursements  on  all  work  of  a  character 
auxiliary  to  the  main  lines  of  production,  such  as  repair  departments, 
moving  departments,  etc. 

e.  The  selling  expense,  divided  into  proper  classifications  for 
analysis. 

f .  The  office  and  general  expenses  that  can  properly  be  charged 
against  each  selling  branch  or  territory. 

g.  The  division  of  general  or  executive  expense  of  such  nature 
that  it  cannot  be  charged  directly  against  a  branch. 

The  importance  of  this  report  will  be  immediately  recognized. 
It  provides  an  analysis  that  enables  any  manager  to  locate  immedi- 
ately the  points  of  profit  and  the  points  of  loss,  provided  the  distribu- 
tion of  credits  and  debits  is  correctly  made.  It  is  the  primary  report 
upon  which  the  balance  of  the  reports  are  founded.  While  it  may 
appear  complicated,  the  business  man  knows  that  it  is  necessary; 
and  the  one  who  fears  its  complication  can  be  assured  that  it  can  be 
developed  very  easily  by  ordinary  methods  of  accounting  and  the 
inauguration  of  comparatively  simple  systems  in  the  factory. 

THE  SALES  REPORTS. 

Coupled  with  the  preceding  report  should  be  first,  a  comprehen- 
sive memorandum  outlining  in  a  simple  manner  the  necessary  work 
of  the  selling  department,  no  matter  how  the  goods  are  distributed 


FACTOKY    AND    SALES   REPORTS  39 

upon  the  market.  This  report  should  show  what  goods  must  be  sold, 
at  what  profit  they  must  be  sold,  and  under  what  expense  they  must  be 
sold,  in  order  to  secure  the  desired  profit  on  the  balance  sheet  at  the  end 
of  the  year.  It  is  not  a  difficult  matter  for  an  intelligent  man  to  take 
such  a  report  as  the  outlined  "Analyzed  Profit  and  Loss"  report, 
consider  what  profit  his  business  should  show,  and  calculate  from  this 
the  profit  he  should  expect  from  each  branch  of  it  in  order  to  secure  this 
profit,  and  under  what  expense  it  is  possible  to  run  in  order  that  his 
gross  profit  from  his  sales  may  not  be  eaten  up  by  selling  and  general 
expenses.  A  simple  enough  method  of  procedure,  but  one  seldom 
taken.  And  often  where  this  sensible  calculation  is  made,  little 
real  scientific  effort  is  made  to  "hew  to  the  line,"  to  insist  upon 
reasonable  profits,  to  hold  down  expenses  and  to  conduct  the  busi- 
ness along  the  lines  which  such  an  analysis  shows  are  absolutely 
necessary. 

The  next  report  on  sales  needed  is  naturally  the  one  showing  the 
actual  results,  territory  by  territory;  showing  volume  and  profit 
secured  and  expense  of  getting  the  business.  It  is  immediately 
apparent  that  a  weekly  (or  hi  some  concerns  a  daily)  comparison  of 
the  actual  sales  results  with  the  data  showing  the  results  that  must  be 
secured  or — as  I  term  it  the  ((must  data" — will  prove  invaluable. 

There  are  naturally  a  number  of  sales  reports  of  a  different  char- 
acter from  these  two  just  outlined  that  should  be  secured  from  the 
selling  end  of  the  business,  but  they  are  amplifications  of  the  main 
reports  and  will  be  touched  upon  later  under  the  sales  division. 

THE  FACTORY  REPORTS. 

The  discussion  of  factory  reports  will  naturally  follow  the  descrip- 
tion of  the  factory  system  and  so  cannot  well  be  elaborated  upon 
here.  They  should,  however,  naturally  give  the  first  importance  to 
exhibiting  progress  upon  contract,  special  and  stock  work,  weekly; 
showing  clearly  the  location  of  this  work  in  the  shop  and  the  steps 
taken  to  get  it  out  on  tune.  The  manufacturer  who  is  constantly 


40  PKOFIT-MAKING   MANAGEMENT 

harassed  by  tardy  deliveries  and  hampered  by  the  lack  of  such  data, 
can  hardly  realize  the  effective  use  that  can  be  made  of  such  weekly 
reports.  The  knowledge  of  exact  conditions,  coupled  with  the  devis- 
ing of  ways  and  means  to  overcome  threatened  delays,  and  constant 
pressure  upon  the  factory,  bring  excellent  results. 

THE  COST  REPORTS. 

Their  extent  will  be  determined  by  the  character  of  the  business. 
But,  in  general,  fully  analyzed  cost  figures  sent  to  the  chief  execu- 
tives for  their  scrutiny,  comparison,  and  criticism,  bring  admirable 
returns.  Let  one  of  the  higher  officers  bring  into  a  committee  meet- 
ing, or  a  general  foremen's  meeting,  a  set  of  fully  analyzed  cost 
returns  upon  some  particular  line  of  the  product,  and  begin  to 
inquire  of  the  different  foremen  present  why  their  share  of  the 
expense  amounts  to  "so  large  an  amount/'  and  there  will  usually 
follow  a  red-hot  discussion  that  will  throw  many  a  valuable  side 
light  upon  costs  of  production. 

Again,  with  accurate  cost  and  stock  data  it  is  not  difficult  to 
secure  monthly  stock  inventories  at  least  approximately  correct. 
Of  course,  a  perpetual  book  inventory  which  enters  into  the  general 
accounting  of  the  company  can  be  devised.  I  find,  however,  that 
not  one  manufacturer  hi  ten  is  willing  to  spend  the  necessary  money 
for  this.  However,  he  would  rejoice  over  a  monthly  inventory, 
secured  without  shutting  the  shop  down,  which,  coupled  with  his 
profit  and  loss  statement  and  the  data  contained  in  his  general 
books,  would  enable  him  practically  to  secure  a  balance  sheet  of  the 
company's  operation  monthly. 

The  other  important  reports  upon  output,  departmental  expenses 
and  results,  production  methods,  tool-room  results,  etc.,  will  be 
treated  later — likewise  the  strictly  executive  reports.  Keep  in  mind, 
however,  that  these  reports  are  so  effective  because  of  the  committee 
system.  They  should  wherever  possible  be  made  up  by  the  committee 
handling  the  different  branches  of  the  product.  And  you  may  be 


FACTORY  AND  SALES  REPORTS.  41 

sure  that  your  committee,  composed  of  enthusiastic  men  whose 
reputations  are  at  stake,  are  going  to  see  that  progress  reports,  cost 
reports,  output  and  production  reports,  represent  the  very  best  that 
they  and  the  shop  can  accomplish,  when  they  know  that  these  will 
be  closely  scrutinized  by  the  heads  of  the  company. 


CHAPTER  IV. 
THE  DESIGNING  AND  DRAFTING  DEPARTMENT. 

A  FTER  the  establishment  of  the  committee  system  and  the 
•*  *•  foundation  of  a  fundamental  scheme  of  reports,  the  next 
logical  step  in  reorganization  is  the  consideration  of  the  designing 
and  manufacturing  system,  methods,  and  processes — the  considera- 
tion of  the  usual  defects,  and  the  determination  of  plans  for  remedy- 
ing them  and  introducing  in  their  stead  the  most  modern  means 
for  efficient,  cheap,  and  accurate  production. 

THE  DESIGNING  AND  DRAFTING  DEPARTMENT. 

The  secrets  of  cheap  production  lie  first  in  the  organization  of  the 
designing  and  drafting  department,  whether  it  be  two  men  or  one 
hundred,  by  methods  that: — 

a.  Will  develop  the  possibilities  in  its  working  force  in  both  gen- 
eral efficiency  and  accuracy  in  details; 

b.  Will  ensure  invariably  a  design  on  a  new  or  a  re-design  on  an 
old  product  that  will  bring  out  the  best  possibilities  of  manu- 
facture, both  as  to  ease  and  cheapness  of  manufacturing,  and 
the  use  of  standard  and  stock  parts; 

c.  Will  bring  about  intelligent  and  sympathetic  co-operation  of 
this  department  and  the  shop,  upon  both  design  and  methods; 

d.  Will  result,  through  the  mutual  co-operation  of  designer,  drafts- 
men, foremen  and  sales  department,  in  a  constant  striving  for 
new  and  better  designs,  a  more  thoroughly  standardized  prod- 
uct, and  lines  of  manufacture  better  suited  to  the  needs  of  the 
market  and  better  fitted  to  outstrip  the  competitor. 

42 


THE    DRAFTING   ROOM  43 

In  inseparable  association  with  the  designing  and  drafting  depart- 
ment is  the  tool  room,  including  the  tool-designing  department. 
Here  indeed  is  the  " heart  of  the  shop."  An  ill  managed,  inefficient 
tool  room  invariably  means  a  run-down  shop.  A  well  managed,  up- 
to-date  tool  room,  headed  by  a  first-class,  tactful  mechanic,  thor- 
oughly versed  in  the  possibilities  of  modern  methods,  modern  tools, 
modern  steels  and  speeds,  should  always  head  the  shop  in  the  right 
direction  and  be  the  great  factor  in  keeping  it  there  if  its  power  is 
recognized  and  properly  guided  and  used.  The  general  designing 
and  drafting  department  and  the  tool  room  may  be  properly  con- 
sidered the  mam  levers  by  which  to  pry  up  slovenly  and  bad  manu- 
facturing conditions,  and  the  strongest  factors  in  gaining  the  desired 
end  of  cheap  and  accurate  production.  The  work  of  these  two 
departments  forms  the  initiative  to  modern  shop  success. 

The  drafting  department,  however,  does  (or  certainly  should) 
originate  the  fundamental  designs  and  plans  and  the  accompanying 
details;  yet  its  work  is  too  often  responsible  for  the  "shop  deviltry" 
that  shortens  the  days  of  many  a  conscientious  factory  superin- 
tendent; it  is  the  department  which  is  seldom  properly  conducted, 
even  in  well  developed  concerns,  and,  in  most  average  or  run-down 
concerns,  it  is  a  "fright." 

The  head  of  this  department,  one  of  critical  importance,  is  often 
a  man  of  limited  shop  experience,  with  little  knowledge  of  methods 
of  adapting  design  to  economical  methods  of  manufacture,  no  appre- 
ciation of  the  value  of  standardization  or  concern  for  the  use  of 
stock  parts  in  designs,  but  plentifully  supplied  with  the  baneful 
"bump  of  importance" — the  spirit  of  "know  it  all."  His  deter- 
mination to  hold  fast  to  his  own  ideas  is  equalled  only  by  his  ingeni- 
ous methods  of  covering  up  his  mistakes,  and  an  intense  jealousy  of 
anyone  (especially  a  shop  man)  who  can  or  does  suggest  any  improve- 
ment in  design  or  method. 

Requirements  for  an  Efficient  Department. — The  first  and  the 
absolute  requirement  for  an  efficient  designing  and  drafting  depart- 


44  PROFIT-MAKING    MANAGEMENT 

ment  is  an  efficient  man  to  manage  and  run  it.  No  half-baked  off- 
spring of  a  school  nor  "graduate"  of  your  existing  department  will 
fill  the  bill.  Both  this  department  and  the  tool  room  call  for  men  of 
a  high  type.  The  more  capable,  the  better.  Men  in  these  positions, 
if  properly  handled,  should  prove  to  be  worth  any  reasonable  sum. 
This  particular  man,  in  addition  to  being  a  capable  designer  and 
draftsman,  should  possess  a  thorough  knowledge  of  the  best  types  of 
machine  tools  and  the  most  modern  machine  methods.  He  should 
also  have  a  good  knowledge  of  foundry  practice  and  pattern  making. 
To  this  necessary  knowledge,  add  tact  and  a  willingness  to  listen  to 
the  shop  foreman  and  to  follow  stock  records  in  designing  new  or  re- 
designing old  work,  and  you  would  have  an  ideal  combination ;  one 
so  rare,  however,  that  I  do  not  advise  anyone  waiting  to  secure  a  man 
with  this  desirable  combination  of  qualities.  You  might  have  to 
wait  too  long. 

These  pages  will  outline  methods  by  which  this  necessary  con- 
sideration of  shop  processes  and  shop  knowledge  of  the  foremen 
(invaluable  as  it  is)  will  be  fully  developed  and  the  valuable  points 
incorporated  in  this  man's  work.  Whatever  his  qualifications  along 
the  lines  mentioned,  however,  he  should  invariably  be  progressive 
to  the  last  degree — ambitious  to  a  fault.  His  mind  must  be  open 
enough  to  consider  the  needs  of  the  market  from  the  standpoint  of 
the  sales  department  and  the  progress  of  the  competitor.  He  should 
be  in  much  closer  contact  with  the  sales  department  than  is  generally 
considered  necessary  or  even  advisable.  Indeed,  the  spirit  between 
designer  and  sales  manager  is  more  often  one  of  hostility  than  of 
co-operation.  And  yet  "  common  horse  sense"  should  teach  us  that 
this  connection  should  be  a  close  one.  The  day  of  hostility  between 
the  factory  and  selling  organizations  is  passing. 

I  have  discussed  at  some  length  the  requirements  necessary  for 
the  head  of  this  department  because  his  importance  is  vital;  and  also 
because  in  most  cases  the  man  usually  in  this  position  falls  far  short 
of  these  requirements,  and  the  firm  thus  fails  to  realize  the  possibili- 
ties of  cheap  production. 


THE    DRAFTING   ROOM  45 

In  many  cases  I  venture  to  predict  that  the  special  conditions  of 
the  case  are  such  as  to  make  it  impossible  to  introduce  a  new  man 
without  danger  of  serious  disruption  of  existing  conditions.  If 
such  be  the  case,  then  introduce  methods  of  organization  and  man- 
agement that  will  check  errors,  force  co-operation  between  the  draft- 
ing room  and  shop,  lead  to  standardization  of  product,  and  provide 
the  inspiration  for  new  and  better  designs  through  other  sources 
than  an  inefficient  head.  Often  it  is  wise  to  introduce  a  new  head 
into  the  department  as  a  "new  draftsman,"  to  work  "on  the  table" 
until  he  is  thoroughly  acquainted  with  conditions  and  can  take  hold 
of  the  department  without  danger  of  disturbance. 

The  qualifications  of  the  balance  of  the  draftsmen  will  depend 
altogether  upon  special  conditions  in  each  case.  I  cannot  pass 
consideration  of  them,  however,  without  suggesting  methods  of 
training  and  advancement  that  will  spur  them  on  to  do  their  best. 

Bi-weekly  meetings  will  do  much  good,  and  when  a  draftsman  is 
working  upon  a  special  design,  meetings  with  the  proper  committee 
will  benefit  him  and  improve  his  work  greatly.  Encourage  your 
draftsmen  to  absorb  all  the  shop  and  foundry  practice  possible,  and 
to  mingle  with  the  shop  foremen  constantly.  Impress  upon  them 
the  necessity  of  studying  existing  machinery  and  stock  conditions. 

The  general  requirements  for  efficient  work  in  this  important 
department,  in  addition  to  those  relating  to  the  organization  itself, 
just  detailed,  can  be  classified  as  follows: — 

1. — Comprehensive  and  businesslike  co-operation  should  be  estab- 
lished between  the  designing  and  drafting  departments  and  the 
shop  foremen.  The  objects  are  manifold.  Great  benefit  will  be 
derived  from  a  free  exchange  of  ideas  and  a  free  criticism  of  design 
by  men  qualified  by  shop  experience  and  a  knowledge  of  former 
mistakes.  Assurance  will  be  obtained  that  every  design  represents, 
in  its  last  analysis,  the  combined  knowledge,  skill  and  experience 
of  your  best  men,  and  the  consequent  assurance  that  when  it  is 
produced  it  will  be  properly  proportioned  for  strength,  will  operate 


46  PKOFIT-MAKING    MANAGEMENT 

properly,  and  will  be  so  designed  as  to  be  produced  in  the  cheapest 
manner  possible.  Such  conferences  will  also  facilitate  the  proper 
routing  of  new  work  through  the  shop  with  reference  to  the  existing 
conditions  of  stock  output  and  machinery. 

This  co-operation,  further,  will  ensure  a  most  thorough  considera- 
tion of  re-design  of  regular  product — a  question  which  is  of  paramount 
importance  in  considering  the  steps  necessary  in  revivng  a  run-down 
concern.  The  general  conditions  surrounding  the  old  line  of  produc- 
tion and  the  problem  facing  one  in  considering  the  general  re-design- 
ing of  this  old  line  are  often  well-nigh  appalling.  But  here  you  must 
start  and  here  you  must  stay  until  a  general  line  of  procedure  is 
mapped  out  and  progress  begun.  And,  watch  that  progress.  See 
that  it  is  made.  Singularly  enough  (in  view  of  its  importance), 
there  is  usually  a  slackening  of  endeavor,  a  lessening  of  effort  in  the 
proper  direction,  after  a  full  plan  of  this  nature  is  mapped  out  and 
work  begun.  Every  excuse  of  "  overload  of  routine  work,"  "  unex- 
pected demands  upon  time  due  to  unusual  conditions,  "etc.,  is  offered 
to  explain  why  the  necessary  progress  upon  work  of  a  critical  nature 
is  not  diligently  pursued. 

Progress  every  day,  if  only  one  new  line  upon  the  desired  drawing, 
should  be  insisted  upon,  and  no  excuse  for  failure  to  accomplish 
this  little  should  be  accepted.  One  of  the  most  irritating  experiences 
of  the  conscientious  factory  manager  is  that  lack  of  progress  upon 
improvements  that  he  knows  are  vital  to  the  business.  "Some 
progress  every  day"  should  be  unflinchingly  called  for  from  those 
delegated  to  handle  these  questions. 

2. — Standardization  is  the  second  great  line  of  advance  to  be 
pursued  in  the  designing  department.  The  entire  designing  and 
drafting  force,  from  the  head  of  the  department  down,  should  always 
keep  in  mind  the  great  benefits  to  be  derived  from  it.  While  this 
applies  particularly  to  lines  of  product  manufactured  under  special 
contracts  and  specifications,  at  the  same  time  much  of  its  advantage 
can  be  applied  even  to  the  production  of  a  so-called  standard  article. 


THE    DRAFTING    ROOM  47 

In  many  cases  standardization  of  a  product  is  possible  if  the  sales 
department  can  be  forced  into  line  and  a  conscientious  attempt 
made  to  introduce  a  standard  article  on  a  market  apparently 
requiring  goods  of  special  sizes  and  quality. 

The  great  advantage  of  this  from  every  standpoint  is  of  course 
apparent.  It  means  cheapening  production  through  duplication  of 
parts  and  ease  of  handling;  increase  of  output  per  square  foot  of 
floor  area  through  quicker  production,  and  the  consequent  reduction 
in  indirect  expense,  per  piece ;  the  possibility  of  building  for  stock  in 
slack  times  and  so  keeping  up  the  factory  output;  quicker  deliveries 
and  more  orders,  better  satisfied  customers,  and  a  more  rapid  turn- 
ing over  of  working  capital — this  latter  being  something  that  the 
financial  managers  of  the  business  will  thoroughly  appreciate  and 
hail  with  joy. 

The  use  of  stock  parts  is  a  profitable  step  toward  standardization 
even  where  product  in  its  entirety  may  not  be  reduced  to  standard. 
The  entire  drafting  force  should  be  provided  with  books  containing 
full  data  upon  the  shop's  standard  small  tools,  such  as  reamers, 
dies,  taps,  etc.  They  should  also  be  continually  forced  to  consider 
methods  of  designing  so  as  to  use  standard  and  stock  parts  already 
manufactured. 

3. — Designing  so  as  to  ensure  cheap  machining  and  assembling 
is  a  third  prime  requirement  of  drafting-room  economy.  The  men 
should  be  continually  impressed  with  the  necessity  of  designing  the 
parts  so  as  to  be  easily  and  cheaply  machined  and  assembled,  and 
that,  too,  upon  the  types  of  machine  tools  already  in  the  shop.  The 
needs  of  the  pattern  maker  and  the  possibilities  of  the  foundry 
should  never  be  forgotten.  Nor  should  the  tool  room  and  its  possi- 
bilities in  the  way  of  making  inexpensive  tools  be  overlooked. 

4. — The  making  and  following  of  drawings  should  be  insisted 
upon.  The  designing  and  drafting  department  should  make  all 
drawings  of  every  character.  Under  no  circumstances  should  any 
drawings  be  made  by  the  shop  foremen.  The  up-to-date  shop  man- 


48  PROFIT-MAKING    MANAGEMENT 

ager  will  smile  at  the  idea  of  this  being  done  in  this  generation;  yet 
I  know  of  several  large  shops,  and  many  small  ones,  where  this  rule 
is  not  being  enforced,  and  the  shop  foremen  (hi  some  cases  even  the 
job  bosses)  make  many  of  the  detail  drawings.  In  all  cases,  how- 
ever, the  drawings  should  be  0.  K.'d  by  the  shop  foremen,  either  in 
committee  or  individually,  before  they  are  placed  in  the  shop.  The 
great  importance  of  this  is  at  once  apparent.  Then,  after  the  draw- 
ings are  0.  K.'d  and  sent  into  the  shop,  they  should  be  followed.  No 
deviations  should  be  permitted.  If  any  change  is  found  necessary, 
then  this  change  should  be  approved  by  responsible  parties,  and 
made  on  the  drawing. 

Reports  from  the  Machine  and  Assembling  Rooms. — Much  good 
can  be  secured  from  a  simple  yet  thorough  system  of  reports  by  the 
foremen,  based  upon  their  actual  experience  in  carrying  through 
their  departments  a  newly  designed  product,  these  reports  to  con- 
tain criticisms  and  suggestions  upon  design,  and  ease  and  cheapness 
of  machining  of  parts. 

In  my  opinion,  all  these  very  desirable  results  mentioned  hi  detail 
here  can  be  secured  only  through  the  consultation  and  co-operation 
of  a  group  of  those  men  best  qualified  by  experience  to  control  and 
solve  the  important  and  intricate  problems  arising  in  the  considera- 
tion of  new  design  or  re-design  of  an  old  product.  I  therefore 
strongly  advise  the  submission  of  all  these  ideas  to  a  committee 
formed  of  the  head  designer  or  draftsman,  the  head  of  the  tool  room, 
and  the  general  factory  committee  made  up  of  the  factory  manager, 
the  important  machine-room  foremen,  and  the  head  cost  man.  This 
committee  should  be  supplemented  from  time  to  time  by  the  pres- 
ence of  the  foundryman,  the  pattern  maker,  and  the  stock  man. 
With  such  a  committee  handling  the  questions  outlined,  the  success 
of  the  plan  is  assured. 

In  cases  where  the  company  is  fortunate  in  having  an  efficient 
head  designer,  such  a  committee  will  prove  a  great  spur,  and  of 
tremendous  assistance  to  him  and  to  the  company.  Where  no 


THE    DRAFTING    ROOM  49 

efficient  head  exists,  this  committee  will  assume  the  important  role  of 
"  originator  of  new  ideas."  Let  the  head  of  the  company  place  in 
the  hands  of  such  a  committee  the  general  problem  of  the  market 
requirements  regarding  a  new  product,  or  the  necessity  of  re-design- 
ing an  old  product,  from  the  standpoint  of  trade  requirements  as 
affecting  either  design  or  costs  of  production. 

The  interest  shown  by  such  a  group  is  immediate  and  intense. 
The  result  of  their  thought  and  work  is  invariably  so  far  superior  to 
the  work  of  any  one  man  as  to  admit  of  no  comparison.  Supported 
by  such  a  system,  the  work  coming  from  the  department  will  be 
scientifically  designed,  correct,  with  every  part  mechanically  strong, 
and  capable  of  being  produced  in  the  cheapest  manner  possible. 
The  entire  design  will  represent  the  best  ideas  of  your  best  men,  and 
every  man  through  his  participation  in  the  particular  product  will 
be  so  interested  as  to  do  his  level  best  to  make  a  success  of  it. 

The  experienced  shop  manager  has  only  to  consider  the  usual 
maddening  program  of  errors  in  data,  mistakes  of  design,  faulty 
judgment  regarding  economy  of  manufacture,  lack  of  standardiza- 
tion of  parts,  and  last,  but  by  no  means  least,  the  covert  hostility  of 
the  shop  man  to  the  new  productions  of  "that  blamed  drafting 
department,"  to  realize  the  possibilities  which  lie  in  developing 
methods  which  will  ensure  accuracy,  economy,  standardization,  and 
the  interest  of  the  machine  foremen  in  the  successful  and  economical 
production  of  any  particular  design. 


CHAPTER  V. 
THE  TOOL  ROOM— THE  HEART  OF  THE  SHOP. 

TN  the  preceding  chapter  I  advanced  the  proposition  that  the 
-*•  essential  preliminary  step  hi  the  reviving  of  a  run-down  con- 
cern is  the  thorough  reorganization  of  the  designing,  drafting,  and 
tool  rooms,  along  rather  new  lines.  The  necessary  conditions  to 
be  secured  in  the  first  two  departments  were  fully  dealt  with  and 
the  functions  which  the  tool  room  should  exercise  toward  the  manu- 
facturing processes  at  large  were  outlined. 

In  order,  however,  that  the  tool  room,  by  its  organization  and 
equipment,  may  be  enabled  to  lead  the  shop  toward  the  goal  of 
manufacturing  success,  it  must  itself  be  instituted  for  the  highest 
efficiency  and  economy  in  the  production  of  tools.  I  feel  that  toot 
much  emphasis  can  not  be  put  upon  the  conception  that  this  is  the 
place  to  begin  the  work  of  reform,  by  close  examination  of  the  exist- 
ing conditions  and  rectification  of  existing  defects.  It  remains,  then, 
to  show  how  the  maximum  possibilities  of  the  tool  room  may  be 
realized.  My  suggestions  are  the  result  of  experience  in  a  number 
of  very  trying  cases  of  factory  inefficiency,  and  the  remarkable 
results  coming  from  the  adoption  of  the  plans  described  fully  justifies 
strenuous  insistence  upon  the  statement  that  this  is  the  real  starting 
point  for  the  campaign  of  physical  improvement. 

THE  TOOL  ROOM. 

The  tool  room,  as  already  mentioned,  has  been  aptly  called  "  the 
heart  of  the  shop."  It  is  the  most  important  department  in  any 
shop,  if  its  full  functions  are  developed  aright.  If  the  designing  and 
drafting  department  is  weak,  the  wide-awake  shop  manager  can 

50 


THE   TOOL   ROOM  51 

supply  the  defects  through  other  sources,  if  necessary;  but  if  the  tool 
room  is  in  an  inefficient  condition,  the  whole  shop  will  invariably 
be  in  correspondingly  bad  shape.  A  well  organized  and  well  equipped 
tool  room,  even  though  it  be  a  very  small  one,  in  charge  of  a  pro- 
gressive, wide-awake,  thoroughly  experienced  man  who  is  willing 
to  co-operate  with  the  balance  of  the  shop,  is  essential  in  the  reviving 
of  a  run-down  concern  or  the  improvement  of  one  not  "up  to  the 
proper  mark  of  efficiency."  It  is  always  interesting,  when  inspect- 
ing a  shop  that  is  in  bad  shape,  to  visit  the  tool  room  and  note  how 
closely  the  entire  shop  conditions  conform  to  the  tool-room  condi- 
tions. At  times  a  good  machine-room  foreman  will  build  up  an 
efficient  department  despite  a  badly  managed  tool  room ;  but  this  is 
rarely  the  case,  owing  to  the  severe  handicap  of  poor  maintenance 
of  machine  tools,  defective  design  of  cutting  tools,  and  the  impossi- 
bility of  securing  any  accurate,  first-class  milling  fixtures,  drill  jigs, 
form  cutters,  etc.,  designed  to  produce  the  machine  work  more 
economically. 

It  is  not  my  intention  to  treat  here  the  questions  of  tool-room 
equipment  and  methods  of  operating  a  tool-supply  room;  for  these 
questions  have  been  fully  discussed  frequently,  especially  in  a  series 
of  articles  that  have  appeared  in  The  Engineering  Magazine.* 
The  needs  of  different  shops  differ,  although  the  equipment  of  lathes, 
milling  machines,  universal  milling  machines,  grinding  machines 
and  one  or  more  planers  is  common  to  all  tool  rooms. 

A  number  of  systems  for  tool  supply-rooms  have  been  described, 
so  that  little  need  be  said  on  this  subject,  except  to  insist  upon 
having  some  accurate  method  of  caring  for  small  tools,  keeping  them 
in  good  condition,  and  checking  up  the  workmen  relative  to  those 
tools  in  their  possession.  Some  simple  system  of  checking  up  the 
men  when  returning  old  or  broken  tools  should  assuredly  be  kept. 
The  item  of  broken  tools  can  become  a  very  large  one  if  the  workmen 

*  See  especially  the  articles  by  John  Ashford,  July  and  August,  1904,  and  by  R. 
Emerson,  Dec.,  1904  and  Feb.,  1905.  Ed. 


52  PROFIT-MAKING    MANAGEMENT 

learn  that  little  or  no  attention  is  paid  to  their  record  in  this  matter. 
A  simple  report  showing  breakages  and  the  parties  responsible  for 
them  will  enable  the  shop  manager  to  locate  his  careless  workmen. 

My  main  object  at  this  time,  however,  is  to  bring  out  clearly  the 
tool  room  and  its  functions  as  factors  in  the  development  of  a  shop 
toward  a  high  standard  of  efficiency,  particularly  when  its  initial 
state  of  efficiency  is  low;  to  show  how  this  department  can  prove  its 
value  in  making  possible  the  determination  of  proper  standards  of 
production  rates,  the  devising  of  vital  data  for  a  proper  wage  sys- 
tem, the  introduction  of  economies  which  the  cost  system  shows  are 
possible,  and  the  lowering  of  production  costs  through  efficient  main- 
tenance of  machine  tools  and  the  building  of  new  tools  especially 
designed  for  the  particular  product  manufactured. 

The  determination  of  proper  standards  of  production  rates  is  a 
subject  which  will  be  treated  fully  in  a  later  chapter.  Its  great 
importance  is  obvious.  The  possible  output  of  the  shop,  the  lowest 
possible  cost  of  production,  the  determination  of  wage-system  stand- 
ards (in  itself  a  subject  of  great  importance),  all  depend  upon  the 
accurate  determination  of  the  lowest  possible  time  in  which  each 
piece  of  work  can  be  completed.  The  method  of  keeping  the  indi- 
vidual workman  and  the  shop  keyed  up  to  that  rate  is  an  entirely 
different  subject,  to  be  discussed  later.  But  the  initial  determina- 
tion of  this  possible  speed  of  production  is  vital.  The  necessary 
tests  are  by  no  means  simple  matters.  They  involve  accurate  knowl- 
edge of  the  best  results  possible  from  the  high-speed  cutting  tool 
steel,  the  proper  shape  and  size  of  cutting  tool,  a  knowledge  of  the 
character  of  the  steel  worked  upon,  and  of  the  greatest  capacity 
of  the  machine  tool  used,  without  too  great  an  expense  for  mainte- 
nance and  depreciation. 

TOOL-ROOM  METHODS. 

The  conditions  surrounding  tool-room  work  often  make  it  diffi- 
cult to  apply  the  same  methods  towards  the  hastening  and  cheapen- 


THE    TOOL   ROOM  53 

ing  of  production  therein  which  might  be  applied  to  the  production 
departments.  Day  pay  is  the  usual  rule.  Owing  to  the  character  of 
the  work,  any  other  wage  system  is  generally  impracticable,  and 
even  if  practicable  would  be  inadvisable  because  of  the  necessity 
for  accuracy. 

Nevertheless,  even  granting  the  difficulties  that  beset  one  in  try- 
ing to  apply  the  principles  of  cheap  production  to  this  chief  agent  of 
progress  and  economy,  the  tool  room  itself — still,  so  high  is  the 
expense  per  man  when  compared  with  that  prevailing  in  the  balance 
of  the  shop,  so  costly  may  the  tool-room  product  run,  of  so  great  im- 
portance is  rapid  production,  and  last,  but  by  no  means  least,  so  many 
are  the  opportunities  for  "laying  down  on  the  job"  without  the  possi- 
bility of  detection  of  any  such  costly  tendencies — that  some  compre- 
hensive plans  must  be  adopted,  first,  to  ensure  the  cheapest  possible 
methods  of  production,  and,  second,  to  check  up  foremen  and  work- 
men properly  as  regards  costs  and  accuracy.  If  these  points  are 
properly  covered,  the  rate  of  production  will  care  for  itself.  Such  a 
policy  is  especially  necessary  in  the  care  of  the  run-down  concern 
with  an  inefficient  or  "  slow-gaited"  tool-room  force,  whether  the 
tool-room  force  is  a  large  or  small  one.  For,  to  state  an  important 
point  which  I  shall  want  to  emphasize,  we  must  always  keep  in 
mind  not  only  the  possibility  of  wasted  money  through  excessive 
tool  costs,  but  also,  and  indeed  especially,  the  waste  of  valuable 
time  in  securing  tools  by  the  use  of  which  large  sums  can  be  saved  in 
the  shop. 

We  must,  of  course,  assume  that  the  tool  room  is  supplied  with 
a  full  equipment  of  high-grade  machine  tools. 

First  get  a  first-class,  high-grade  tool-room  foreman.  This  can- 
not be  emphasized  too  strongly.  Do  not  plan  a  campaign  of  im- 
provement with  any  expectation  of  a  satisfactory  outcome  unless  this 
first  step  is  taken.  Well  paid,  high-grade  mechanics  are,  in  the 
end,  the  cheapest  labor  for  the  tool  room.  The  mistakes  of  the  low- 
wage  workman  are  too  costly.  Owing  to  the  high  hourly  rate  of  the 


54  PROFIT-MAKING    MANAGEMENT 

tool  maker,  thorough  organization  in  the  tool  room  is  necessary  in 
the  interest  of  low  costs  and  rapid  production  of  the  tools  them- 
selves ;  but  beyond  this,  is  the  great  importance  of  getting  the  new 
tools  into  service.  Delays  are  doubly  costly,  as  already  pointed  out  ; 
and  yet  unless  the  tool  room  is  well  organized  and  systematized,  it  is 
often  more  productive  of  "unaccountable  delays  and  disappointed 
hopes"  than  of  the  new  and  much  needed  tools.  The  dilatory 
movement  of  the  ordinary  tool  room  constitutes  one  of  the  most  try- 
ing experiences  of  the  factory  manager. 

In  the  older  types  of  shop,  even  where  large  forces  of  tool  makers 
are  employed,  the  practice  of  allowing  the  expert  high-priced  work- 
man to  machine  up  and  fit  all  the  component  parts  of  a  single  tool 
and  then  assemble  it  into  the  finished  product  still  prevails.  Under 
such  conditions,  this  high-priced  tool  maker  will  be  found  machining 
up  jig  bushings,  legs,  special  screws,  and  other  parts  of  special  tools 
that  can  be  easily  standardized,  and  in  many  cases  will  be  turning 
out  in  small  quantities  work  that  should  be  handled  on  stock  orders 
and  turned  out  in  large  quantities  by  much  cheaper  labor  at  a  frac- 
tion of  the  cost. 

The  similarity  between  this  method  of  building  tools  and  the  old- 
tune  methods  of  building  the  finished  machine  for  the  market  is 
striking.  But  just  as  the  old-time  method  of  construction  in  the 
case  of  the  finished  article  was  found  too  slow  and  costly  for  modern 
conditions  of  trade  and  competition,  and  has  been  rapidly  supplanted 
by  comprehensive  plans  for  standardization,  duplication,  produc- 
tion hi  quantities  and  careful  supervision  of  labor,  just  so  the  old- 
time  tool-room  methods  are  being  changed  so  as  to  take  advantage  of 
these  obviously  economical  steps  in  the  building  of  costly  tools. 

Standardization.— A  tool-room  force  working  under  the  old-time 
methods  just  described  will  produce  hi  the  course  of  a  year  sets  of 
tools  that  are  distinguished  chiefly  by  a  great  lack  of  uniformity  and 
absence  of  any  attempt  at  standardization.  Yet  a  close  study  of  the 
ordinary  shop  tool  conditions  and  requirements  will  prove  that  the 


THE   TOOL   ROOM  55 

standardization  of  many  parts  is  possible  if  only  a  thorough-going 
attempt  is  made  to  effect  it.  This  applies  particularly  to  those  shops 
where  the  tools  are  of  the  smaller  sizes.  For  example,  in  the  case  of 
drill  jigs,  such  parts  as  bushings,  legs,  stops,  screws,  puis — and  even 
the  bar  stock — can  be  standardized  to  a  comparatively  few  sizes. 

Duplication. — Once  this  is  done  the  duplication  of  these  parts  in 
quantities  and  the  keeping  of  them  in  the  stock  bins  for  immediate  use 
becomes  possible.  The  savings  are  at  once  apparent.  First,  a  large 
reduction  hi  the  initial  cost  results  because  of  this  production  in  quan- 
tities, and  that  too  by  a  much  lower  priced  workman  than  the  tool 
maker.  Again,  the  possibility  of  always  having  these  parts  on  hand 
when  wanted  by  this  tool  maker  will  invariably  result  in  a  large  saving 
in  both  first  cost  and  tune. 

Subdivision  of  Labor. — The  modern  practice  tends  therefore 
toward  the  same  rigid  subdivision  of  labor  hi  the  tool  room  that  exists 
in  the  production  department.  The  high-priced  tool  maker  does  no 
work  that  can  be  performed  by  cheaper  men.  Not  only  are  those  parts 
that  can  be  standardized  and  machined  in  quantities  produced  by  a 
less  expensive  class  of  labor,  but  also  much  of  the  closer  work  in 
milling,  turning,  grinding,  etc.,  is  often  handled  by  special  men  who 
do  no  other  classes  of  work.  Thus  the  tool  maker,  instead  of  labori- 
ously producing  each  and  every  part  of  any  tool  at  great  cost  and  loss 
of  valuable  time,  becomes  an  expert  adjuster  and  assembler,  receiv- 
ing promptly  from  various  sources  many  portions  of  the  tool  he  is  to 
finish,  these  parts  requiring  simply  the  finishing  operations  at  his 
skilled  hands  to  bring  them  "to  size." 

In  one  large  shop  under  my  management,  where  conditions  were 
unfavorable,  we  applied  these  rules  of  subdivision  of  labor  and 
standardization  to  great  advantage,  especially  hi  the  building  of 
large  numbers  of  small  drill  jigs.  The  screws  were  standardized. 
All  stops,  legs  and  other  small  parts  were  turned  out  hi  large  quanti- 
ties on  the  automatics.  The  bushings,  also  manufactured  in  large 
quantities,  were  turned  into  stock  in  such  condition  as  to  require 


56  PROFIT-MAKING    MANAGEMENT 

simply  the  finishing  operations  by  the  experienced  tool  maker. 
Even  the  bar  steel  forming  the  top,  bottom,  and  sides  of  the  jigs, 
was  finished  to  standard  dimensions,  cut  off  to  standard  lengths, 
and  placed  in  stock  for  immediate  use.  The  tool-designing  depart- 
ment followed  closely  this  scheme  of  standardization,  the  result 
being  a  large  saving  in  tool  costs,  even  though  at  times  slightly 
more  metal  was  used  in  the  jig  than  was  required  by  either  the  part 
to  be  manufactured  or  the  character  of  the  operation.  This  extra 
cost  was  saved  many  times  over  in  the  lower  wage  cost,  due  to  the 
fact  that  the  high-priced  man  had  only  a  few  finishing  operations 
upon  the  component  parts  of  the  tool,  and  thus  became  an  assembler 
and  adjuster  to  a  large  extent. 

In  addition  to  this  pleasing  reduction  in  cost,  there  ensued  a  still 
more  satisfactory  increase  in  the  output  of  greatly  needed  tools  from 
a  department  handicapped  by  lack  of  room  and  of  high-grade  tool 
makers. 

THE  SMALL  SHOP. 

In  the  case  of  the  small  tool  room  of  very  few  men  such  subdivision 
of  work  is  often  impracticable.  But  even  in  a  department  composed 
of  four  or  five  men,  common  horse-sense  methods  applied  strictly 
to  their  work  will  result  in  a  saving  in  both  money  and  time  that  is 
of  great  importance  and  fully  proportionate  to  the  savings  in  the 
large  departments.  In  shops  where  the  tool-room  force  is  a  small 
one  there  usually  exists  a  tendency  to  ignore  this  part  of  the  organi- 
zation and  let  it  get  along  as  best  it  can.  This  is  a  vital  mistake. 
In  the  first  place,  the  tool-room  force  is  seldom  half  large  enough  con- 
sidering the  great  value  of  its  work.  Again,  the  relative  importance 
of  this  department  in  the  case  of  the  small  plant  is  fully  as  great 
as  in  the  case  of  the  large  company.  Its  work  bears  the  same  rela- 
tion to  cost,  accuracy,  and  quickness  of  production  in  one  case  as  in 
the  other.  Whether  the  department  be  small  or  large,  the  same 
methods  of  organization,  division  of  labor,  and  checking  up  of  tool 
costs  can  be  used  to  great  advantage. 


THE    TOOL   BOOM  57 

SPEEDING  UP  TOOL  PRODUCTION  AND  CHECKING  THE  COST. 

Lost  time  in  the  tool  room,  as  already  pointed  out  and  emphasized 
is  a  more  serious  matter  than  in  any  other  department  in  the  shop, 
since  delay  in  the  production  of  a  tool  means  not  only  a  high  rate  of 
increase  in  actual  cost  of  that  tool,  but  may  often  involve  a  con- 
tinuation of  a  shop  loss  which  could  be  avoided  were  the  tool  in  use — 
a  loss  often  many  times  the  cost  of  the  tool  itself. 

The  importance  of  adopting  up-to-date  methods  for  increasing 
tool-room  production  and  for  checking  up  and  lowering  costs  then 
seems  obvious.  And  yet  the  lack  of  effort  to  accomplish  these 
results  in  most  well  run  modern  shops  (to  say  nothing  of  the  poorly 
managed)  is  as  singular  as  it  is  prevalent.  The  belief  seems  to  pre- 
vail that  the  cost  of  a  tool  is  too  difficult  a  matter  either  to  estimate 
or  investigate.  And  yet  the  admission  of  the  fact  that  it  is  a  diffi- 
cult question  to  solve  makes  the  possibilities  of  loss  in  many  direc- 
tions the  more  apparent,  the  need  for  some  method  of  removing  them 
the  more  pressing. 

The  peculiar  conditions  make  the  problem  a  hard  one.  The  work 
is  usually  altogether  special  and  must  be  done  upon  the  day-work 
basis  of  pay.  The  difficulty  of  securing  proper  economical  results 
from  this  day-work  system  often  leads  to  lax  methods  in  administra- 
tion and  management.  The  amount  of  time  wasted  by  workmen 
under  the  day-rate  system,  unless  they  are  rigidly  supervised,  is 
astonishing.  Only  an  approximation  to  a  "  few  days  work"  is  often 
secured  with  difficulty.  Even  rigid  supervision  avails  but  little 
unless  it  is  supplemented  by  some  system  that  will  prove  a  spur  to 
the  men — some  system  through  the  use  of  which  the  good  men  may 
feel  that  there  is  an  opportunity  for  recognition  and  reward,  and 
laggards  may  know  equally  well  that  if  they  do  fail  to  produce  work 
in  a  reasonable  length  of  time  they  will  surely  be  noted  for  punish- 
ment. 


58  PROFIT-MAKING    MANAGEMENT 

TOOL  COST  CARD. 

The  tool-room  system  advocated  here  depends  upon  the  deter- 
mination (by  estimate)  of  the  proper  tool-room  costs,  item  by  item, 
operation  by  operation,  before  work  begins  upon  the  tool;  and  then, 
after  the  tool  is  completed,  the  comparison  of  the  actual  with  the  esti- 
mated costs,  and  especially  the  noting  of  the  records  of  the  rapid  and 
the  slow  workmen  as  shown  upon  the  cards. 

The  card  on  the  following  page  is  self-explanatory. 

Form  of  Card. — The  form  given  is  merely  suggestive.  In  some  cases, 
the  division  of  "operations"  is  unnecessary.  In  other  cases,  they  are 
important.  In  most  cases,  the  total  time  in  which  the  work  is  actually 
done  can  be  placed  upon  the  card  after  the  operation  is  completed ; 
inasmuch  as  the  man  has  before  his  eyes  a  statement]of  what  should 
be  done,  he  will  know  what  he  is  accomplishing  in  the  way  of  speed  of 
production  and  he  is  certain  that  his  record,  be  it  good  or  bad,  will 
"go  up  to  the  front  office."  Immediate  and  insistent  inquiries  as  to 
causes  and  reasons  for  delay,  when  these  occur,  should  invariably  be 
made.  Substantial  benefits  may  be  derived  by  offering  to  the  men 
fair  bonuses  hi  case  they  secure  a  clean  record  of  work  done  within 
the  estimated  time  in  the  course  of  the  week.  This  offering  of  bonuses 
removes  the  idea  of  "  driving"  which  is  so  distasteful  to  many  work- 
men. 

Such  a  system,  simple  to  the  last  degree,  still  is  remarkably 
effective.  Indeed,  it  is  so  effective  because  it  contains,  hi  simple 
form,  the  fundamental  principles  underlying  all  progressive  methods 
of  increasing  shop  efficiency,  namely: — 

1. — Determination  of  time  in  which  work  should  be  done. 

2. — Placing  it  before  the  workmen  themselves  in  definite  form. 

3. — Holding  before  them  the  chance  for  rewards  in  bonuses  and 
promotion  for  record  work,  and  the  fear  of  reprimand  or  discharge 
in  case  of  failure  through  carelessness,  negligence,  or  laziness. 


THE  TOOL  ROOM 


59 


Tool  No. 

TOOL  RECORD  CARD 
Drawing  Nos. 

Name  of 

Part 

Name  of 
Part 
of  Tool 

Estimated              Actual               Name  of              „          . 
Operations               ^                   Cogtg                Workman           R^k" 

Total  Cos 

((             11 

Complete 
This  Tool 
Date  of  C 
If  any  de 
Special  L 
Design  ar 
Tool  pass 

ts  Labor 

Material 

Cost 

must  he  completed  by 

Completion 

lay,  Why? 
istructions 
id  Estimated  Cost  Approved  by 
fid  by  Committee 

Sig.  of  Sec'y 

SUGGESTED  FORM  FOR  TOOL  COST  AND  RECORD  CARD. 


60  PROFIT-MAKING  MANAGEMENT 

THE  TOOL-ROOM  COMMITTEE. 

The  question  that  immediately  arises  will  be  "Who  sets  the  esti- 
mated time  for  the  work  and  who  checks  up  the  actual  time  re- 
quired?" I  answer  "The  committee,  as  described  in  the  preceding 
chapters  of  this  book." 

While  the  work  of  this  committee  will  be  varied,  its  functions 
many,  still  they  will  always  relate  to  the  one  main  object  so  ardently 
sought  for — cheaper  production  costs. 

Its  members  are  vitally  interested  in  the  original  cost  of  the  tools 
and  the  rapidity  with  which  they  can  be  gotten  through  the  tool 
room.  These  members  are  usually  better  qualified  to  estimate  the 
length  of  time  that  should  be  required  to  build  a  tool  of  any  descrip- 
tion than  any  one  man  or  group  of  men.  After  a  short  experience  in 
estimating  and  checking  up  costs,  they  will  soon  become  sufficiently 
expert  to  answer  the  purpose. 

Method  of  Procedure. — After  due  consideration  has  been  given  to 
the  tool  model  and  the  design  of  the  tool  itself,  the  estimate  of  cost  of 
the  tool  should  be  determined  and  the  record  placed  upon  cards  as 
noted.  These  cards  should  always  be  issued  from  and  by  this  com- 
mittee, so  as  to  have  the  proper  effect  upon  the  workman.  The  card 
should  travel  with  the  work  so  that  the  workman  may  have  a  constant 
reminder  beside  him  as  to  the  time  in  which  this  body  of  men  expect 
the  work  to  be  completed — a  constant  reminder  that  any  failure  to  live 
up  to  the  estimate  will  be  surely  noted  upon  this  card  and  an  explana- 
tion required — that  his  failure  makes  an  indelible  record  against  him 
which  will  infallibly  be  seen  by  those  in  charge  of  the  shop  and  com- 
mented upon  to  his  disadvantage — that  a  poor  excuse  for  his  failure 
will  only  blacken  his  record  still  further — that,  on  the  other  hand, 
any  betterment  of  the  estimated  record  will  be  noted  with  satisfac- 
tion by  these  same  men  and  will  surely  redound  to  his  credit.  A 
first-class  honest  workman  will  be  pleased  at  the  opportunity  afforded 
him  of  placing  an  evidence  of  his  superior  ability  upon  records  which 
are  lasting  and  which  are  noted  by  those  high  in  authority  with  a 


THE    TOOL   ROOM  61 

to  future  promotions.     The  loafer  and  sluggard  will  soon  be 
detected  and  can  be  sought  out  for  improvement  or  discharge. 

Owing  to  the  fundamental  importance  of  the  work  of  this  com- 
mittee and  the  fact  that  upon  it  hangs  most  of  the  burden  of  bring- 
ing the  shop  to  a  condition  of  high  efficiency,  a  short  resume  of  its 
functions,  mentioned  briefly  in  Chapter  IV,  may  well  be  brought 
out  at  this  point. 

An  outline  of  its  province  would  be  somewhat  as  follows : — 
1. — Planning  new  designs  of  product  to  meet  new  market  con- 
ditions in  such  a  manner  as  to  ensure : — 

a.  Proper  construction  and  accuracy  of  operation. 

b.  A  course  of  manufacture  that  will  result  in  the  lowest  possible 

cost  of  production. 

2. — Planning  the  re-design  of  an  old  product  in  the  interest  of 
economy  of  production. 

3. — Devising  and  considering  plans  whereby  the  shop  production 
efficiency  may  be  raised  to  a  high  point. 

This  involves: — 

a.  A  close  consideration  of  cost  data  so  that  the  problem  can  be 

attacked  at  its  most  critical  point. 

b.  The  devising  of  full  sets  of  special  tools  so  as  to  make  possible 

the  attainment  of  the  desired  end  of  lower  manufacturing  cost. 

c.  The  thorough  consideration  of  these  tools  from  the  standpoint 

of  design  and  low  production  cost. 

d.  Investigation  of  existing  manufacturing  conditions  in  the  shop, 

and  the  careful  planning  of  methods  through  which  a  high 
state  of  manufacturing  efficiency  may  be  reached.  This  itself 
involves  a  thorough  knowledge  of  the  types  of  machine  tools 
best  adapted  to  the  work,  and  the  best  results  that  can  be 
obtained  from  them  through  the  use  of  modern  high-speed 
steel  for  the  cutting  tools — a  big  subject  in  itself  concerning 
which  there  is  still  a  lack  of  definite  data. 


62  PROFIT-MAKING    MANAGEMENT 

e.  The  determination  of  "standard  time"  (or  the  time  hi  which 
each  job  of  work  should  be  done)  on  each  job  in  the  shop  by 
calculation  and  test.  This  work  is  of  an  importance  that  can 
aptly  be  termed  critical.  It  is  perhaps  the  most  important 
work  of  the  committee.  As  I  will  explain  in  detail  later,  I 
do  not  consider  that  the  committee  itself  should  attend  to  the 
tests  and  the  determination  of  the  standard  times,  but  the 
head  of  the  tool  room  should  actively  direct  the  work  under 
the  strict  supervision  of  this  committee.  The  work,  espe- 
cially at  its  inception,  should  be  constantly  considered  by  this 
body  hi  order  to  ensure  proper  results. 

Tool-Room  Committee  Membership. — In  ninety-nine  cases  out 
of  a  hundred,  the  head  of  the  tool  room,  supplemented  by  one  or 
two  of  the  best  machine-room  foremen  and  the  head  cost  man, 
form  the  best  group  for  undertaking  this  highly  important  work. 
Full  reports  of  comprehensive  tests  made  to  determine  the  best 
production  possible  from  each  machine  must  be  made  the  basis  for 
one  line  of  shop  rejuvenation.  The  investigation  of  machine- 
shop  processes  and  methods  can  best  be  made  by  such  a  group. 
The  result  of  such  action  will  invariably  be  as  surprising  as  it  is 
profitable. 

The  designing  of  new  tools  holds  great  possibilities  for  economy 
or  waste.  Of  course,  the  simple  designing  and  building  of  new  tools 
in  a  haphazard  manner  can  be  left  to  the  head  of  the  tool  depart- 
ment and  his  tool  designer;  but  only  " haphazard  results"  can  be 
expected.  The  results  attained  from  this  general  method  will  often 
prove  futile,  for  the  head  of  the  department  is  seldom  in  a  position  to 
determine  by  himself  the  most  important  problems  to  attack.  I 
have  seen  the  results  of  many  weeks'  work  in  the  tool  room  thrown 
away  almost  immediately  after  the  completion  of  a  new  set  of  tools, 
because  of  some  change  hi  method  and  design  that  upon  examina- 
tion proved  profitable. 


THE   TOOL   ROOM  63 

The  work  of  laying  out  a  thorough,  consistent,  and  profitable 
line  of  work  for  the  tool  room  requires  judgment  of  the  highest 
quality.  If  the  original  designing  or  re-designing  of  the  product 
deserve  the  attention  of  the  best  qualified  men  hi  the  organization, 
formed  into  a  committee,  then  certainly  this  even  more  important 
and  vital  work  should  receive  like  consideration.  In  fact,  considera- 
tion of  the  design  of  a  new  or  old  product,  and  consideration  of  the 
tools  necessary  to  build  the  component  parts  of  this  same  product, 
go  hand  in  hand. 

I  therefore  urge  the  serious  consideration  of  the  tool  problems 
by  the  committee  formed  of  the  head  of  the  tool  room,  the  head 
designer,  the  members  of  the  factory  committee,  the  head  of  the 
cost  department,  and  any  other  of  the  machine-room  foremen  in 
whose  departments  the  work  is  to  be  performed. 

Keep  in  mind  that  the  most  important — the  really  vital — "  secrets 
of  cheap  production,"  can  be  solved  only  by  the  work  of  these  two 
departments,  and  particularly  of  the  tool  room. 

If  your  shop  is  not  producing  as  much  as  it  should,  or  the  costs  of 
production  are  too  high,  then  start  a  campaign  of  rejuvenation.  But 
start  it  through  the  designing  department  and  the  tool  room,  whether 
these  departments  number  hundreds  of  men  or  but  five.  Map  out  a 
logical  and  systematic  plan  of  improvement,  working  through  these 
departments,  calling  to  your  aid  also  the  active  heads  of  those  depart- 
ments who  meet  and  conquer  the  difficulties  of  manufacture  daily, 
and  whose  suggestions  and  aid  will  prove  of  peculiar  value. 

You  can  thus  be  assured  of  a  product  designed  along  lines  that 
are  practical,  accurate,  and  that  meet  the  requirements  for  eco- 
nomical manufacture.  Coupled  with  this,  you  will  secure  from  the 
work  of  the  tool  room  and  its  committee  data  relative  to  possibili- 
ties of  speed  of  production  that  are  vital,  plans  for  new  systems  of 
manufacture  that  are  often  radical,  and  as  profitable  as  they  are 
radical,  and  plans  for  new  systems  of  tools  that  will  often  revolu- 
tionize individual  processes  and  bring  about  great  reductions  in  cost. 


CHAPTER  VI. 
MINIMIZING  THE  TIME    OF  MACHINE-TOOL .  OPERATIONS. 

TWO  fundamental  principles  of  cheap  production  lie  hidden 
away  amongst  inefficient  shop  processes,  bewildering  dis- 
order of  shop  conditions,  and  lax,  inaccurate,  and  utterly  mis- 
leading shop  methods.  They  are  of  the  greatest  importance,  and 
yet  nine  times  out  of  ten  a  searching  investigation  will  prove  that 
little  consideration  has  been  given  them  in  ordinary  shop  practice. 
They  are  so  closely  related  that  their  simultaneous  discussion  is 
advisable.  They  are  both  essentially  "  time  savers."  These  two 
principles  are : 

1. — The  determination  of  "standard  time"  for  each  job  and  its 
tabulation,  introduction,  and  enforcement. 

2. — The  absolute  elimination  from  the  workman's  routine  of 
every  duty  but  that  of  running  his  machine  continuously  and 
efficiently;  the  bringing  to  him  of  tools  and  stock  for  his  next  job 
before  he  is  ready  for  it. 

The  first  and  possibly  the  more  vital  of  the  two  is  the  determina- 
tion of  standard  time  upon  each  job — that  is,  the  shortest  space  of 
time  in  which  each  job  should  be  completed  (including  setting  up), 
under  normal  conditions  and  with  due  regard  to  the  fullest  possibili- 
ties and  capacity  of  the  machine  tool,  the  cutting  tool,  and  the  stock. 

An  appalling  undertaking,  this,  in  most  shops,  under  existing 
conditions;  appalling  and  seemingly  impossible  because  of  lack  of 
knowledge  of  the  best  shapes  for  cutting  tools,  of  the  best  methods 
of  hardening  and  grinding,  of  the  results  to  be  secured  from  the  use 
of  high-speed  steel  cutting  tools,  of  the  best  methods  that  can  and 
should  be  adopted  by  a  skilled  workman,  of  the  capacity  of  the 

64 


MINIMIZING    OPERATION   COSTS  65 

machine  tools  in  the  shop,  and,  worst  of  all,  because  of  the  lack  of 
men  skilled  in  the  best  methods  for  handling  these  cutting  tools — 
men  capable  of  doing  the  work  and  of  seeing  that  the  workmen  do  it. 

It  scarcely  seems  necessary  to  argue  in  favor  of  this  determination 
of  standard  time;  and  yet  many  manufacturers  seem  to  prefer  to 
leave  the  question  of  the  rapidity  of  production  to  the  foreman's 
judgment  and  skill  alone.  Their  confidence,  while  perhaps  amiable, 
is  usually  misplaced.  No  man  with  real  shop  experience  will  assert 
that  the  average  foreman  does,  or  in  fact  can,  know  the  best  results 
that  can  be  secured  in  machining  today,  unless  he  has  been  afforded 
and  has  accepted  exceptional  opportunities  for  making  thorough  tests 
of  a  really  scientific  character — something  that  rarely  happens.  Even 
should  a  foreman  possess  this  desirable  knowledge,  it  is  beyond  the 
power  of  any  one  man  to  supervise  properly  any  group  of  men,  even 
though  small,  so  that  the  high  point  of  efficiency  may  be  assuredly 
reached,  and  at  the  same  time  do  the  other  work  that  usually  falls  to 
the  foreman's  lot. 

Again,  the  use  of  high-speed  steel  for  cutting  tools  is  a  develop- 
ment of  recent  years.  Notwithstanding  all  that  has  been  published 
on  this  subject,  comparatively  few  shop  foremen  really  know  what  the 
fullest  possibilities  of  its  use  are,  and  fewer  still  ever  force  their  depart- 
ments to  use  it  to  its  fullest  efficiency  even  after  its  value  has  been 
recognized.  In  fact,  there  have  been  comparatively  few  tables  ever 
published  that  show  in  a  practical  manner  just  what  can  be  done  with 
it.  The  machine-tool  builders  themselves,  singularly  enough,  seem 
to  be  unable  to  give  any  positive,  accurate  advice  as  to  the  actual  con- 
ditions of  cutting  speeds,  feeds,  and  depth  of  cut  under  which  their 
own  tools  can  best  operate,  and  even  the  makers  of  the  tool  steels  do 
not  provide  tables  of  much  practical  use. 

Nevertheless  the  work  of  such  a  man  as  F.  W.  Taylor,  hi  his 
remarkably  thorough  and  extremely  valuable  publication,  "  The  Art 
of  Cutting  Metals,"  clearly  shows  the  possibilities  that  lie  in  the  use 
of  these  modern  cutting  tools — Messrs.  Taylor  and  White  being  the 


66  PROFIT-MAKING   MANAGEMENT 

discoverers  of  these  possibilities  and  Mr.  Taylor  himself  leading  the 
van  in  the  application  to  practical  use  of  these  principles.  This  one 
work  makes  clear  not  only  the  great  possibilities  but  also  the  great 
difficulties  that  originally  lay  in  the  path  of  the  investigator.  With 
all  of  these  points  in  mind,  it  is  simply  "rot"  to  give  heed  for  a 
moment  to  any  claim  of  any  shop  man  that  his  knowledge  of  this  sub- 
ject is  at  all  exhaustive. 

Standard  times  should  be  determined  by  some  one,  some  how. 
Certainly  no  one  can  dispute  the  fact.  Experiments  and  experience 
show  that  the  good  old  plan,  "depending  on  the  foreman"  for  this 
determination,  as  mentioned  above,  gives  results  40  to  60  per  cent 
short  of  maximum  efficiency.  Inasmuch  as  your  entire  business  is 
built  upon  and  depends  upon  the  cost  of  production — or,  in  its  last 
analysis,  simply  "the  time  it  takes  each  man  to  do  his  job  of  work," 
it  is  of  fundamental  importance  that  that  standard  time  be  first  deter- 
mined by  methods  that  will  ensure  accuracy. 

The  second  cardinal  principle  of  cheap  production  stated  at  the 
outset  was  "  the  absolute  elimination  from  the  workman's  routine  of 
every  duty  but  that  of  running  his  machine  continuously  and  effi- 
ciently; the  bringing  to  him  of  tools  and  stock  for  his  next  job  before 
he  is  ready  for  it." 

The  machine  hand,  assembler,  or  other  worker  must  be  forced 
to  concentrate  his  skill  and  attention  upon  his  own  work  and  that 
work  alone,  making  it  impossible  for  him  to  waste  his  time  (and  thus 
the  employer's  money)  upon  work  he  should  not  do.  Consider  for  a 
moment  the  many  things  that  a  machine  hand,  for  example,  will 
ordinarily  do  other  than  operate  his  particular  tool,  and  then  give  a 
moment's  thought  to  analyzing  the  result.  The  worst  "time  wasters' ' 
can  be  classified  somewhat  as  follows: 

a.  Running  to  the  supply  room  for  stock  for  a  new  job.     Result, 

the  machine  tool  is  shut  down. 

b.  Getting  tools,  clamps,  etc.,  from  the  tool  room  for  a  new  job. 

Result,  the  machine  tool  is  shut  down. 


MINIMIZING    OPERATION   COSTS  67 

c.  Grinding  his  own  tools  (and  very  badly  at  that).    Result,  the 

machine  is  shut  down. 

d.  Excessive  time  in  "setting  up"  a  job,  due  to  lack  of  proper 

instruction,  or  to  a  tendency  to  "soldier"  because  of  lack 
of  supervision.  Result,  the  machine  is  shut  down. 

e.  To  these  add  the  further  tremendous  loss  of  output  because 

the  workman  fails  to  use  the  proper — the  very  best — cutting 
speeds,  feeds,  and  depth  of  cuts,  through  either  lack  of  knowl- 
edge or  lack  of  supervision,  and  you  have  a  combination 
that  cuts  the  output  of  the  ordinary  shop  far  below  what  it 
should  be. 

If  your  shop  is  running  under  ordinary  foremanship  supervision, 
with  no  thorough  method  for  bringing  to  the  workman  his  stock;  for 
providing  him  with  tools  for  the  next  job  before  he  is  ready  for  it; 
with  no  method  of  instructing  him  what  to  do  and  how  to  do  it,  and 
no  thorough  way  of  comparing  his  output  with  what  it  should  be 
according  to  the  best  standards  of  today,  (mark  me!  not  your  fore- 
man's standards) — then  you  can  make  up  your  mind  that  your  output 
is  far  too  low  according  to  the  best  standards  of  production. 

You  may  imagine  that  "carefully  calculated"  piece-work  rates 
will  protect  you ;  but  if  your  piece-work  rates  have  to  allow  for  the 
conditions  stated  just  above,  you  are  deceiving  yourself  grossly  as  to 
the  possibilities  of  your  output. 

The  important  consideration  is  time!  time!  Time  of  the  work- 
man running  his  tool — that  is  the  vital  point.  Every  minute  counts 
for  profit  if  this  tool  is  operating  continuously  and  efficiently;  for 
loss  if  it  operates  under  the  nullifying  influences  detailed  above. 

Consider  for  a  moment!  Your  entire  factory  investment — build- 
ing, power  plant,  transmission  plant,  all  probably  built  and  selected 
with  great  care  and  expenditure  of  money — is  simply  to  care  for 
and  operate  the  separate  units  of  machine  tools,  or  to  house  properly 
your  assembling  spaces.  Your  investment  in  machine  tools  repre- 
sents large  sums.  This  vast  expenditure  is  made  with  but  one  object 


68  PROFIT-MAKING    MANAGEMENT 

in  view — that  of  producing  work  and  producing  it  as  cheaply  as  pos- 
sible. Calculate  accurately  your  indirect  charges  of  every  character; 
proportion  the  total  against  each  machine  tool  according  to  the 
"machine-rate"  method  of  apportionment,  and  note  carefully  how 
large  must  be  the  rate  per  hour  for  each  machine.  This  will  be  found 
to  be  an  astonishingly  large  proportion  of  the  labor  rate  per  hour  and 
will  prove  a  good  index  of  the  great  cost  of  lost  time  in  the  shop. 

Is  it  not  clear,  then,  that  each  machine  tool  should  be,  nay  must 
be,  brought  to  as  high  a  factor  of  operating  efficiency  as  possible? 
Is  not  your  entire  investment  made  with  that  one  end  in  view?  Does 
it  pay  to  have  the  efficiency  of  any  collection  of  these  units  reduced  15 
per  cent  to  25  per  cent  by  the  existence  of  such  shop  methods  as  those 
detailed,  by  which  the  men  operating  the  machines  are  actually  com- 
pelled to  shut  them  down  to  hunt  up  their  next  job,  to  collect  their 
tools,  to  grind  their  tools,  and  to  do  many  things  that  should  be  done 
for  them?  Can  you  afford  to  suffer  an  even  heavier  reduction  in  effi- 
ciency due  to  lack  of  knowledge  of  the  "  best  time  for  each  job?" 

The  importance  of  these  points  can  be  further  emphasized  by  con- 
sidering that  all  such  delays,  which  in  their  total  represent  a  large 
amount,  directly  affect  cost  and  profits,  output,  indirect  expense  of 
every  description,  quick  movement  of  stock,  and  hence  ultimately  the 
amount  of  working  capital  needed  in  the  business,  and  the  possi- 
bilities of  quicker  deliveries,  with  a  resultant  direct  effect  upon  the 
sales  department  and  customers.  Indeed,  aside  from  the  question  of 
costs  and  profits,  nothing  is  more  important  to  the  separate  mem- 
bers of  a  company — from  the  executives  with  their  financial  problems, 
through  the  sales  department  with  their  selling  problems,  to  the 
harassed  factory  manager — than  the  quick  movement  of  stock. 

The  reason  for  the  continual  absorption  of  working  capital  into 
machinery  or  stock  that  worries  many  a  financial  officer,  or  for 
deliveries  so  delayed  as  to  affect  seriously  the  efficiency  of  the  selling 
organization,  or  for  excessive  and  unreasonable  and  possibly  unex- 
pected costs  that  seem  and,  in  fact,  are  out  of  reason — the  reason  for 


MINIMIZING    OPERATION   COSTS  69 

all  lies  hidden  away  back  in  the  shop  processes  and  methods.  It  crops 
out  at  the  individual  lathe,  planer,  shaper  or  assembling  bench,  and 
then  only  to  the  keen  experienced  eye.  The  workmen  busy?  Surely. 
Look  at  them  hustling !  But— see  that  group  around  the  tool-supply 
window  waiting  for  tools?  How  many  are  waiting  at  the  tool  grind- 
ers to  grind  their  own  tools  each  in  his  own  "individual"  manner? 
There  is  a  mechanic  who  has  taken  twenty  minutes  to  "  set  up"  his  job 
instead  of  ten.  Then  pause  and  wonder  how  in  the  world  anyone  or 
two  or  more  foremen  can  be  sure  that  the  men  now  operating  the 
machines  are  using  proper  speeds  and  feeds  and  getting  the  most  out 
of  the  machine  and  the  tool. 

In  fact,  the  causes  for  all  these  serious  troubles  are  located  so  far 
back  toward  the  fundamentals  of  production — the  individual  units 
affording  the  causes  are  so  seemingly  unimportant,  and  such  is  the 
difficulty  of  recognizing  these  conditions,  buried  as  they  are  in  a  busy 
shop — that  they  are  overlooked  or  ignored. 

As  a  general  proposition,  the  greater  the  difficulty  of  solving  such 
problems  the  more  important  and  necessary  becomes  that  solution, 
simply  for  the  reason  that  in  this  you  are  dealing  with  humane  ele- 
ments to  whom  is  given  the  opportunity  of  slowing  up  in  production 
solely  because  of  that  very  difficulty  that  lies  within  the  problem 
itself  and  its  solution.  And  yet  so  fundamental  and  vital  is  their 
importance  that  they  cannot  be  ignored. 

THE  STARTING  POINT  FOR  MINIMIZING  OPERATION  COSTS. 

Investigation  of  Existing  Machinery. — Any  plan  for  the  intro- 
duction of  proper  methods  for  the  determination  of  standard  time  and 
the  elimination  of  wasted  time  must  begin  by  an  investigation  of  the 
existing  shop  machinery — an  individual  report  upon  each  machine 
tool,  especially  touching  upon  the  defects,  and  a  recommendation  as 
to  what  types  should  be  purchased  in  the  future  to  meet  modern  pro- 
duction requirements.  This  is  a  matter  of  great  importance,  but 
machinery,  designed  to  stand  up  under  the  latest  high-production 


70  PBOFIT-MAKING    MANAGEMENT 

requirements,  are  recognized  and  listed  up  at  the  beginning  of  the 
introduction  of  any  new  plans,  this  important  matter  is  liable  to  be 
lost  sight  of  later,  with  the  consequence  that  when  the  time  for  pur- 
chases of  new  machinery  does  come,  the  older  inefficient  types  are 
clung  to  and  the  shop  is  further  encumbered  with  old-style  tools. 

Nor  is  the  question  of  securing  a  more  rigid  and  efficient  tool  such 
a  simple  question  as  at  first  appears.  Few  machine-tool  manufac- 
turers are  making  an  earnest  attempt  to  place  upon  the  market  tools 
strong  enough  to  meet  the  more  severe  requirements  of  today.  Why? 
First,  because  comparatively  few  have  made  tests  of  sufficient  scien- 
tific worth  to  determine  where  the  points  of  greatest  weakness  really 
are  and  how  to  strengthen  them  properly.  Second — there  is  the 
money  tied  up  in  old  patterns,  old  stock  in  the  factory  bins,  hi  ma- 
chines going  through  the  process  of  manufacturing,  and  finally  hi 
finished  machine  tools  carried  in  the  sales  rooms.  Changes  of  a  radi- 
cal character  would  prove  a  serious  matter  under  such  conditions. 
And,  again,  the  demand  of  the  manufacturer  for  better  and  heavier 
tools  has  not  been  urgent  enough  to  force  the  machine-tool  builder 
into  the  tremendous  trouble  that  a  thorough  redesigning  of  the  older 
types  would  surely  cause.  Therefore  the  latest  product  of  a  machine- 
tool  manufacturer  is  not  necessarily  adapted  to  the  methods  of  pro- 
duction that  I  am  advocating. 

Greater  driving  power  is  usually  the  first  requirement.  Accurate 
tests  have  shown  that  modern  lathes,  for  instance,  should  have  fully 
double  the  driving  power  usually  contemplated  in  their  design.  This 
is  a  point  that  must  be  considered  carefully.  Of  course  a  proper 
increase  in  driving  power  of  a  lathe,  for  example,  means  wider  cones, 
heavier  bearings,  and  stronger  heads.  Immediately  there  follows  the 
question  of  the  rigidity  of  the  bed.  It  is  at  once  apparent  that  this 
is  a  very  important  point,  and  yet  too  little  attention  has  been  paid  to 
the  design  of  bed  best  suited  for  withstanding  the  strains  and  stresses 
due  to  the  use  of  new  high-speed  cutting  tools.  Solidity  is  very  nec- 
essary. The  consideration  of  the  need  of  strength  and  rigidity  should 


MINIMIZING    OPERATION   COSTS  71 

certainly  be  applied  to  the  tail  stock.  Slide  rests  and  tool  holders 
should  be  simple  and  strong.  The  tool  must  be  held  rigidly  under  all 
conditions.  The  tool  posts  should  be  set  down  lower  than  is  custom- 
ary in  everyday  practice.  Under  modern  conditions  much  greater 
feeding  power  is  needed. 

But  however  certain  we  may  be  that  defects  in  machine  tools  have 
a  direct  effect  upon  the  rate  of  production  and  the  cost  of  the  product, 
existing  conditions  may  prevent  purchase  of  new  tools.  Inasmuch 
as  I  have  been  through  the  mill  several  times  with  run-down  concerns, 
I  appreciate  fully  the  fact  that  most  manufacturers  are  obliged, 
through  sheer  financial  stress,  to  ignore  any  scheme,  no  matter  how 
promising,  that  involves  at  the  outset  a  thorough  replacement  of  the 
existing  machinery  with  the  most  modern  types,  even  though  it  can 
be  demonstrated  that  the  latter  are  50  per  cent  more  efficient. 

The  practical  question  that  confronts  many  a  manager  is:  "What 
on  earth  can  I  accomplish  with  my  present  old '  rattle  traps'  of  machine 
tools?  I  couldn't  buy  gold  dollars  for  98  cents  if  I  had  to  pay  cash, 
much  less  spend  thousands  for  replacing  my  present  machinery.  I 
must  first  make  good  with  what  I  have.  After  we  are  on  firm  ground 
we'll  talk  about  stronger  and  better  machine  tools." 

True!  Very  true!  A  viewpoint  very  often  overlooked  by  the 
manager,  or  by  the  man  who  has  this  work  in  charge  but  doesn't  have 
to  produce  the  dollars  to  "keep  the  old  ship  afloat."  This  latter 
situation,  which  is  a  stern  actuality  with  many  a  man  who  is  eager 
to  improve  conditions,  is  all  compelling  and  must  give  shape  to  the 
preliminary  methods  of  procedure.  This  I  shall  try  to  keep  in  mind. 

Granting,  however,  the  hard  fact  that  many  concerns  are  obliged 
first  to  dig  out  the  problem,  using  their  existing  facilities,  it  is  of  all 
the  greater  importance  that  two  reports  relative  to  machine  tools  be 
made  out: — 

First,  a  report  showing  what  heavier,  stiffer,  and  more  efficient 
types  of  machines  should  be  substituted  for  existing  types  when  the 
proper  time  comes. 


72  PKOFIT-MAKING   MANAGEMENT 

Second,  a  full  report  upon  each  and  every  machine  tool  hi  the 
shop,  showing  its  points  of  weakness  and  its  limitations  hi  cutting 
speeds,  feeds,  and  depth  of  cuts ;  how  it  can  be  strengthened ;  a  descrip- 
tion of  the  kind  of  work  that  should  be  done  on  it ;  a  record  of  best 
times  on  jobs;  a  full  statement  of  the  best  machine  tool  to  substitute 
for  it,  and  a  clear-cut  comparison  of  possible  production  by  the  use 
of  the  latter  machines. 

I  warn  you  again  that  unless  this  be  done  systematically  at  the 
start,  it  probably  never  will  be  done ;  then  as  time  goes  on  you  will 
find  yourself  burdened  with  many  a  newly  purchased  machine  tool 
just  as  weak  and  inefficient  as  the  older  one  it  replaces. 

In  considering  the  problems  of  increasing  production  in  any  par- 
ticular shop,  we  find  therefore  that  they  become  problems  of  devising 
methods  and  making  tests  upon  the  supposition  that  existing  machines 
and  facilities  must  be  used  hi  regular  production — that,  however 
advantageous  the  latter  types  of  tools,  the  important  question  of  low- 
ering costs  must  be  considered  on  the  basis  of  developing  to  the 
uttermost  the  efficiency  of  the  present  machinery.  We  must  there- 
fore keep  hi  mind  these  points  hi  the  building  up  of  our  system.  The 
great  importance  of  gathering  all  our  data  systematically  and  of  using 
them  scientifically  cannot  be  too  strongly  insisted  upon. 


CHAPTER  VII. 

POSSIBILITIES  ATTENDING  THE  USE  OF  HIGH-SPEED 

STEEL. 

/CLOSELY  linked  with  the  study  of  the  design,  character,  and 
^^  remodelling  of  the  existing  machine  tools,  is  the  second  great 
step  in  the  betterment  of  machine  processes — the  use  of  high-speed 
steel  cutting  tools. 

The  possibilities  underlying  their  introduction  and  full  employ- 
ment have  been  thoroughly  discussed  by  other  writers  and  proven 
again  and  again  in  everyday  shop  practice  where  thorough  methods 
have  been  adopted.  It  is  sufficient  to  say  that  the  increase  hi  produc- 
tion over  that  secured  through  the  use  of  the  older  carbon  steels  may 
be  expected  to  reach  from  40  per  cent  to  85  per  cent  (depending 
upon  the  character  of  the  metal  being  cut)  if  the  machine  tools  are 
in  proper  condition  to  withstand  the  strains  of  the  increased  cutting 
speeds,  feeds,  and  cuts.  If  the  shop  under  consideration  is  in  a  run- 
down condition,  and  there  has  been  lack  of  system  in  shop  processes 
as  well  as  lack  of  efficiency  hi  production  methods,  a  much  greater 
increase  than  90  per  cent  may  reasonably  be  expected.  I  have  noted 
myself  records  of  over  200  per  cent  increase  in  efficiency  and  out- 
put, and  have  been  shown  records  hi  a  number  of  cases  that  exceed 
300  per  cent.  Of  course  to  anticipate  such  large  increases  hi  all  cases 
would  be  foolish,  but  there  are  many  cases  today  where  such  results 
are  well  within  the  range  of  possibility.  Such  a  prize  is  well  worth 
fighting  for. 

Before  passing  to  the  important  questions  that  follow  I  cannot  for- 
bear pressing  upon  the  interesting  fact  that  in  a  great  number  of 
shops  the  recognition  of,  and  the  tremendous  enthusiasm  for,  possibili- 

73 


74  PROFIT-MAKING    MANAGEMENT 

ties  of  high-speed  steel  for  cutting  tools  and  for  better  production 
processes,  seem  to  be  confined  to  the  primary  installation  and  the  first 
fever  of  enthusiasm  over  its  introduction ;  after  this,  the  shop  often 
settles  down  to  a  dead  level  of  production  far  below  its  proper  point, 
and  the  ultimate  increase  in  efficiency,  instead  of  being  fully  60  per 
cent  or  more,  is  nearer  12  per  cent. 

How  often  have  I  seen  a  shop,  in  its  first  spasm  of  delight  over 
the  discovery  of  high-speed  steel  and  its  possibilities  of  increase  in 
production  as  applied  to  their  peculiar  circumstances,  eagerly  scan- 
ning new  records,  planning  great  things  for  the  future,  Often  the 
officials  are  brought  into  the  shop  to  see  the  first  results.  Mayhap 
the  president  will  take  into  his  office  some  of  the  pieces  for  paper 
weights,  look  them  over  gleefully,  compare  the  new  and  the  old 
records  with  the  fine  showing  of  increased  efficiency,  and  take  pleasure 
in  the  thought  of  what  he  will  do  to  the  trade  when  all  his  work  is 
produced  at  such  a  low  cost.  And  then  this  matter  of  getting  the 
best  results  from  the  new  methods  is  placed  in  the  hands  of  a  few 
ignorant  foremen — each  with  different  ideas  as  to  the  f orging ,  dress- 
ing, hardening,  and  grinding  of  these  tools,  with  no  definite  idea  as  to 
proper  shapes,  angles,  and  clearances,  and  no  real  knowledge  of  the 
possibilities  of  production  that  rest  in  the  proper  treatment  of  the 
problem.  Soon  the  entire  important  question  is  swallowed  up  hi  the 
pressing  problems  of  everyday  production,  and  the  only  real  knowl- 
edge that  the  manager  possesses  on  the  subject  is  that  "  We  are  buy- 
ing and  using  regularly  brands  of  such-and-such  a  make  of  high- 
speed steel." 

Later  on  the  official  will  pick  up  his  "paper  weight"  and  wonder 
what  has  become  of  the  expected  reduction  hi  labor  cost  that  at 
first  appeared  so  simple  to  make.  Somehow  or  other  his  cost  records 
do  not  show  those  material  reductions  that  he  assumed  were  assured. 
The  cause?  Lack  of  method. 

This  is  no  fairy  story  nor  dream.  If  the  manager  of  the  average 
concern  wants  to  ascertain  the  fact  that  these  comments  in  all  proba- 


HIGH-SPEED    STEEL  75 

bility  apply  to  his  own  shops,  let  him,  after  ascertaining  what  should  be 
accomplished  upon,  say,  certain  classes  of  lathe  work,  then  go  down 
into  the  shop  and  ascertain  for  himself  just  what  is  being  done.  And 
while  on  the  way  to  the  shop  itself,  don't  stop  at  the  factory  office  and 
ask  any  foolish  questions,  for  if  you  do,  "information  galore"  will  be 
your  lot,  but  as  for  actual  facts  right  from  the  machine  tool — little 
of  it  for  your  portion!  But  let  us  turn  to  measures  by  which  the 
use  of  high-speed  steel  may  be  made  to  yield  the  maximum  results  in 
regular  work : — 

THE  PROVISION  OF  ABUNDANT  CUTTING  TOOLS. 

The  determination  of  proper  and  standard  shapes  for  cutting  tools, 
and  the  supply  of  a  sufficient  quantity  to  avoid  lost  time  is  the  first 
point  of  attack.  Before  another  step  is  taken  these  standard  tool 
shapes  must  be  determined  and  must  be  rigidly  adhered  to.  The  old  tool 
dresser,  who  is  in  all  probability  totally  ignorant  of  the  proper  shapes 
of  tools  as  determined  by  scientific  experiments,  and  probably  stub- 
bornly sticking  to  his  "home-made"  knowledge  of  hardening  the 
modern  tool  steels,  must  be  eliminated.  The  practice  of  allowing 
a  hundred  workmen  to  grind  their  tools  in  a  hundred  different  ways 
must  positively  be  stopped. 

In  place  of  these  haphazard,  inefficient  methods  must  be  substi- 
tuted those  that  will  lead  to  the  adoption  of  standards  proven  by  ex- 
periments and  experience  to  be  efficient,  and  these  must  be  adhered 
to  without  deviation. 

In  view  of  the  differing  opinions  of  factory  men  upon  the  subject 
of  proper  shape  of  tools,  it  is  fortunate  that  we  can  refer  to  the  results 
of  and  deductions  from  the  experiments  of  Dr.  Nicholson,  and  later, 
and  indeed  especially,  to  those  of  Mr.  F.  W.  Taylor  of  Philadelphia, 
as  guides  which  can  safely  be  followed.  The  latter  tests  of  Mr. 
Taylor  are  especially  exhaustive  and  convincing.  The  results  of  the 
tests  performed  in  a  modest  way  under  my  direction  are  confirmed  by 
Mr.  Taylor's  data.  The  limits  of  this  article  prevent  any  lengthy  dis- 


76  PROFIT-MAKING    MANAGEMENT 

cussion  of  the  many  important  points  to  be  observed;  they  must 
be  skeletonized  only. 

1. — In  determining  the  most  effective  shape  for  any  tool,  such  as 
for  instance  a  lathe  tool,  careful  consideration  must  be  given  to  the 
fact  that  limitations  may  have  to  be  placed  upon  the  shape  which 
would  provide  the  greatest  cutting  efficiency,  by  the  necessity  of  con- 
sidering the  difficulty  and  cost  of  forging  and  grinding.  These  costs 
may  prove  such  as  to  require  a  modification  of  the  type  which  per  se 
would  be  the  most  efficient. 

2. — The  dynamometer  tests  by  Dr.  Nicholson  demonstrated  the 
fact  that  a  tool  with  lip  angle  of  54  degrees  (cutting  angle  60  degrees, 
clearance  6  degrees)  would  remove  soft  steel  at  a  low  degree  of  pres- 
sure. Such  an  acute  angle,  however,  can  hardly  be  considered  for 
commercial  use,  because  of  the  danger  of  crumbling.  He  established 
the  fact,  however,  that  we  should  generally  adopt  the  sharpest  angle 
of  cutting  tool  that  would  not  crumble  under  the  strain  of  working 
conditions.  His  tests  showed  that  on  medium  cast  iron  cutting  angles 
should  be  76  to  80  degrees  (with  clearance  of  6  degrees)  and  con- 
sequently their  lip  angle  should  be  about  70  to  74  degrees.  His  tests 
upon  soft  steel  were  not  conclusive  because  of  work  conditions, 
but  the  tests  he  made  indicate  that  a  cutting  angle  of  about  70 
degrees  (lip  angle  64  to  65  degrees)  lasted  the  longest  time  in  rapid 
cutting. 

Mr.  F.  W.  Taylor's  tests  show  that  tools  for  cutting  softer  steels 
should  have  a  clearance  angle  of  6  degrees,  back  slope  of  8  degrees, 
side  slope  of  22  degrees,  or  a  lip  angle  of  61  degrees.  For  cutting 
cast  iron  and  harder  steel  the  tool  should  have  clearance  angle  of  6 
degrees,  back  slope  of  8  degrees,  side  slope  14  degrees,  or  a  lip  angle 
of  68  degrees.  On  harder  steel  a  clearance  angle  of  6  degrees,  back 
slope  of  5  degrees,  side  slope  9  degrees,  or  a  lip  angle  of  74  degrees 
is  recommended.  On  chilled  iron  a  lip  angle  of  86  to  90  degrees  is 
recommended. 

Great  care  must  be  exercised  to  see  that  the  point  of  the  tool  is 


HIGH-SPEED   STEEL  77 

blunt  to  such  a  degree  that  crumbling  cannot  occur.  The  round- 
nose  tool  with  a  large  radius  of  curvature  has  been  adopted  by  me 
as  the  best  of  its  type,  although  straight  broad-nosed  tools  can  at  times 
be  used  to  good  effect.  As  regards  the  question  of  side  slope  vs.  back 
slope  I  favor  steep  side  slope,  though  guarding  to  the  utmost  possible 
against  gouging  into  the  work.  A  combination  of  these  two  can  be 
secured  that  will  produce  good  results. 

This  question  of  shapes  of  tools  must  be  thoroughly  thrashed  out 
and  settled  by  the  expert  and  the  committee  before  another  step  is 
taken.  Decide  upon  your  standard  types.  But  whatever  types  are 
decided  upon,  by  all  means  adopt  a  few  set  rules  in  regard  to  tools, 
and  stick  to  them. 

First.  Reduce  your  sizes  of  tools  and  the  types  of  tool  steel  to  a 
minimum. 

Second.  Adopt  standard  shapes  and  then  don't  change  them. 

Third.  Stock  up  your  tool-supply  room  with  plenty  of  small  tools. 
Keep  the  workmen  supplied. 

Forging. — The  final  standard  shapes  of  tools  having  been  decided 
upon,  then  take  up  the  important  question  of  the  proper  forging  of 
the  tools.  Here  is  where  vigilance  should  begin.  In  the  first  place, 
limit  gauges  will  pay.  Your  tools  must  be  forged  to  the  correct 
shape  and  in  such  a  manner  as  to  reduce  the  preliminary  grinding 
to  a  minimum.  The  shapes  must  be  considered  with  care  so  as  to 
provide  for  cheap  and  effective  tool  grinding  after  the  tool  begins 
its  life  of  usefulness.  Naturally  the  conclusions  reached  in  the  con- 
sideration of  standard  shapes  will  influence  very  largely  the  methods 
of  forging.  Do  not  run  the  risk  of  starting  cracks  in  your  tool  steel 
by  nicking  it  and  breaking  the  pieces  off  cold.  In  heating  the  tool  do 
it  slowly  so  that  the  heat  will  have  ample  time  to  penetrate  the  entire 
bar.  Unless  this  is  done  cracks  may  develop.  Bring  it  up  to  a  light 
yellow. 

Hardening. — Considering  the  large  volume  of  good  information 
now  available  as  to  the  best  methods  of  hardening  high-speed  tool 


78  PROFIT-MAKING   MANAGEMENT 

steel,  it  is  strange  how  often  we  find  the  toolsmiths  adhering  to  plans 
of  their  own. 

It  is  of  great  importance  that  your  toolsmiths  should  be  given  to 
understand  that  any  adherence  to  the  old  "color"  ideas  in  the  pro- 
cesses of  hardening  must  be  absolutely  abandoned,  and  that  the  newer 
methods  of  hardening  recommended  by  the  makers  of  tool  steel  must 
be  absolutely  followed.  At  one  time  the  methods  described  by  the 
makers  were  unnecessarily  complicated,  in  order  to  throw  a  certain 
degree  of  mystery  around  the  processes,  but  of  late  the  tendency  has 
been  toward  a  decided  simplification. 

It  is  highly  desirable  that  the  number  of  grades  of  high-speed 
steel  used  in  a  shop  be  reduced  to  as  low  a  number  as  possible — 
certainly  not  over  two,  and,  if  possible,  one — and  that  a  thorough 
standard  method  of  hardening  be  adopted,  and  adhered  to.  Owing 
to  the  tendency  of  the  ordinary  toolsmith  to  slip  back  into  his  old 
slipshod  ways,  it  is  important  that  some  accurate  record  of  his  hard- 
ening processes  and  some  check  be  kept  upon  him,  especially  during 
the  period  when  practical  methods  of  hardening  are  being  introduced 
and  thoroughly  standardized.  The  record  need  be  only  a  simple  one, 
but  must  be  sufficient  to  enable  you  to  trace  unerringly  any  defects 
appearing  in  the  tools  due  to  bad  process  of  hardening,  and  to  center 
the  responsibility  for  these  mistakes  upon  the  toolsmith  responsible 
for  them. 

I  therefore  suggest  the  form  on  the  opposite  page  for  keeping  hard- 
ening and  tempering  records. 

The  methods  of  hardening  lathe,  planer  and  boring  tools  are  fully 
described  by  the  makers.  Generally  the  forged  nose  of  the  tool  is 
placed  in  a  well-burned-through  coke  or  coal  fire,  and  brought  slowly 
to  a  white  welding  heat.  This  heat  should  be  raised  to  a  point  where 
the  nose  begins  to  soften.  Care  should  be  taken  to  see  that  this 
heat  extends  over  fully  three-quarters  of  an  inch  of  the  nose.  At  this 
fusing  heat,  the  white-hot  part  should  be  put  immediately  under  the 
strongest  and  coldest  ah-  blast  which  is  available,  compressed  ah-  being 


HIGH-SPEED    STEEL 


79 


HARDENING  RECORDS. 
Date 


Tools 


Size 


Quality  of  Steel  Lot  No 


Remarks 


Hardening  Heat  Temperature. 
Cooling  Agents. 
Tempering  Heat  Temperature. 
Toolsmith. 


If  defective,  Why?. 


FORM  FOR  HARDENING  RECORDS. 

the  best  to  use.  Under  no  circumstances  must  the  tool  be  brought  in 
contact  with  water  while  it  is  hot.  It  is  probably  preferable  to  harden 
the  white-hot  nose  of  the  tool  hi  fish  or  lard  oil  until  it  grows  mode- 
rately cool,  and  then  to  continue  the  cooling-off  under  a  cold  blast. 

Mr.  Taylor,  hi  his  description  of  the  heat  treatments,  brings  out 
the  important  feature  that  the  nose  of  the  tool  should  be  heated 
slowly  to  a  bright  cherry  red,  so  that  the  heat  may  penetrate  to  the 
center  of  the  tool.  From  the  bright  cherry  red  up  to  the  melting 
point,  the  tool  should  be  heated  as  rapidly  as  possible  in  an  intensely 
hot  fire  until  the  nose  of  the  tool  begins  to  soften.  He  urges  very 
strongly  the  importance  of  using  an  intensely  hot  fire  for  the  second 
period  of  heating. 

The  cooling  of  the  tool  should  be  done  rapidly  until  it  is  below 
1,550  degrees  F.  From  this  point  it  makes  little  difference  whether 


80  PKOFIT-M^KING    MANAGEMENT 

it  is  cooled  rapidly  or  slowly.  Mr.  Taylor  advises  the  use  of  a  bath 
of  red-hot  molten  lead  in  bringing  the  tool  down  below  a  temperature 
of  1,550  degrees. 

In  his  article  on  the  "Art  of  Cutting  Metals"  he  brings  out  the 
advantage  of  the  second  or  low-heat  treatment,  which  is  obtained  by 
re-heating  the  tool  which  has  had  the  high-heat  treatment  to  a  tem- 
perature between  700  and  1 ,240  degrees  F.  Great  care,  however,  must 
be  used  to  see  that  the  higher  temperature  is  not  exceeded,  for  should 
this  happen  the  quality  of  the  tool  will  be  seriously  affected. 

For  the  heating  of  special  form  tools,  milling  cutters,  etc.,  special 
methods  are  of  course  necessary,  the  use  of  the  ordinary  coke  or 
coal  fire  being  out  of  the  question.  Where  a  number  of  these  parts 
are  heated  at  a  time,  great  care  must  be  taken  to  see  that  they  do 
not  touch  one  another.  Special  furnaces  should  be  used.  These  can 
now  be  purchased  for  a  reasonable  figure.  In  these  furnaces  the  work 
can  be  properly  suspended  so  that  separate  pieces  will  not  come  hi 
contact  with  one  another,  and  accurate  control  of  the  heating  can  be 
secured  with  the  aid  of  a  pyrometer. 

Grinding. — As  was  pointed  out  under  the  heading  of  shapes  of  tools 
and  forging,  it  is  necessary  to  determine  these  shapes  with  care  so 
that  the  cost  of  grinding  the  tools  will  not  be  excessive. 

It  seems  hardly  necessary  to  assert  the  importance  of  having  all 
tools  ground  in  one  place  and  according  to  standard  shapes  There 
are,  however,  a  surprising  number  of  shops  still  left  in  which  the 
workmen  are  allowed  to  grind  their  own  tools  in  their  own  way. 
Inasmuch  as  tests  show  that  the  shape  to  which  a  tool  is  ground  will 
affect  its  efficiency  to  a  very  high  degree,  it  is  perfectly  obvious  that 
such  a  plan  as  allowing  the  workmen  to  grind  their  own  tools  is 
simply  ruinous,  to  say  nothing  of  the  question  of  wasted  time  on  the 
part  of  the  workmen. 

We  must,  of  course,  assume  that  under  the  heading  of  shape  of 
tools  the  manufacturer  has  determined  just  what  grinding  angles 
should  be  adopted  throughout.  It  is  of  much  importance  that  these 


HIGH-SPEED   STEEL  81 

angles  be  rigidly  adhered  to,  not  only  because  they  will  prove  the 
most  efficient,  but  also  because  all  the  tabulations  which  any  one  may 
make  up  for  any  particular  shop  will  be  based  upon  these  standard 
shapes  and  consequently  any  variation  from  these  shapes  will  tend 
to  vitiate  the  records  and  so  annul  the  good  points  of  the  determina- 
tion of  standard  time. 

In  my  opinion,  all  grinding  of  tools  should  be  done  by  automatic 
machines,  so  that  all  angles  can  be  ground  uniformly.  If,  however, 
this  grinding  is  still  to  be  done  by  hand,  it  is  very  important  that  you 
get  a  thoroughly  skilled  man  and  watch  him  with  extreme  care,  espe- 
cially at  first,  to  see  that  he  will  adhere  to  your  specifications  for 
grinding  angles.  If  you  do  not  watch  him,  he  is  almost  certain  to  slip 
back  to  methods  of  his  own  or  to  adopt  those  of  other  men  hi  the  shop. 
If  this  grinding  is  done  by  hand,  then  provide  the  tool  grinder  with 
proper  templates  and  tables  so  that  the  possibility  of  mistakes  will  be 
eliminated  as  far  as  possible.  Such  is  the  importance  of  grinding 
these  tools  accurately,  however,  that  an  automatic  machine  grinder 
will  be  found  almost  necessary. 

Overheating  of  the  cutting  tool  during  grinding  is  one  of  the 
greatest  causes  of  deterioration  of  quality.  Caution  is  generally 
impressed  upon  the  people  handling  these  tools,  and  it  can  not 
be  urged  upon  them  too  strongly.  Many  a  tool  apparently  in  good 
condition  has  been  ruined  by  overheating  in  the  grinding  operation. 
The  tool  should  be  moved  continually.  A  cooling  agent  directly  on 
the  nose  of  the  tool  should  always  be  used.  Many  makers  of  high- 
speed steel  state  that  while  grinding  on  a  dry  wheel  may  be  done, 
at  the  same  time  great  care  must  be  taken  to  see  that  the  tool  is  not 
discolored,  i.  e.,  overheated. 

I  concur  in  the  statement  of  Mr.  Taylor  that  on  the  average  a 
lathe  tool  should  be  so  operated  that  grinding  would  be  required  at 
the  end  of  an  hour  and  a  half,  going,  of  course,  upon  the  presumption 
that  the  tool  is  of  standard,  high-grade  quality.  In  many  of  the  tests 
on  which  records  have  been  presented  and  in  the  data  which  are 


82  PROFIT-MAKING    MANAGEMENT 

always  submitted  by  the  high-speed  steel  maufacturers,  we  find  a 
continual  reference  to  the  length  of  time  a  tool  runs  without  regrind- 
ing.  This,  however,  is  of  very  little  interest  to  the  average  manufac- 
turer, as  the  question  is  not  how  long  a  tool  may  run  without  regrind- 
ing,  but  how  much  should  a  tool  be  forced  so  as  to  produce  the  most 
work  with  a  minimum  expense  for  grinding,  keeping  hi  mind  at  all 
times  that  the  crowding  of  the  machine  tool  is  the  important  con- 
sideration. The  question  of  how  long  a  tool  may  run  without  regrind- 
ing  sinks  into  the  background,  especially  if  the  grinding  of  a  tool  may 
be  done  in  a  scientific  manner  by  automatic  grinders. 

The  use  of  cooling  agents,  such  as  soda  water,  is  highly  desirable. 
An  increase  in  production  of  35  per  cent  on  medium  and  soft  steel  can 
be  secured  through  the  use  of  a  properly  directed  heavy  stream  of 
water. 

Finally,  let  me  urge  the  necessity  of  keeping  a  large  supply  of 
tools  already  ground  up  in  the  tool-supply  room,  so  that,  under  no 
circumstances,  will  the  workman  be  compelled  to  wait  for  his  cutting 
tools.  This  is  an  important  point  and  is  often  overlooked. 


CHAPTER  VIII. 

THE  DETERMINATION  OF  STANDARD  TIMES  FOR 
MACHINING  OPERATIONS. 

A  SSUMING  that  we  have  determined  upon  standard  shapes  and 
•*  ^  have  the  proper  facilities  and  men  for  the  forging,  hardening 
and  grinding  of  tools  properly,  we  now  come  to  the  consideration  of 
the  question  of  making  such  experiments  as  will  make  it  possible 
to  determine  with  a  high  degree  of  accuracy  just  what  the  shop  ought 
to  be  able  to  accomplish  in  the  way  of  production  with  the  existing 
equipment. 

To  sum  up  anew  the  elements  of  the  problem  before  us,  the  "stand- 
ard times"  for  any  shop  depend  upon  the  following: 

.1. — The  character  and  limitations  of  the  existing  machine  tools. 

2. — The  introduction  and  use  of  high-speed  steel  for  cutting  tools. 
This  will  include : — 

a.  The  determination  of  the  proper  shapes  for  tools. 

b.  The  provision  for  proper  treatment  of  steel  of  this  char- 

acter in  forging,  hardening  and  grinding. 

c.  The  determination  of  the  best  working  conditions  possi- 

ble, such  as  the  cooling  agent,  etc. 

3. — The  securing  of  the  maximum  possibilities  in  cutting  speeds. 
This  includes: — 

a.  The  careful  consideration  of  tests  already  made  and  sub- 

mitted by  different  investigators,  giving  of  course  due 
thought  to  the  conditions  existing  at  the  time  of  the  test. 

b.  The  adaptation  of  these  records  to  existing  shop  condi- 

tions and  the  making  of  thorough  tests  in  the  local 
shop  under  the  limitations  imposed  by  types  of  machine 
tools  existing  in  the  shop. 
83 


84  PROFIT-MAKING    MANAGEMENT 

4. — The  collation  of  all  production  data  upon  a  systematic  plan  and 
their  arrangement  so  that  they  can  be  used. 

a.  The  instruction  of  the  foreman  and  the  workman  as  to  the 

results  to  be  expected  and  how  to  secure  them. 

b.  The  insurance  that  the  every-day  production  follows  closely 

this  standard  of  efficiency. 

The  first  and  second  sections  were  discussed  in  the  preceding  chap- 
ter. The  third  and  fourth — that  is,  the  fixing  and  the  practical  intro- 
duction of  standard  times — remain  to  be  considered. 

The  first  problem  that  confronts  the  factory  manager  is  how  to 
start  to  make  tests  on  the  bewildering  number  of  pieces  used  in 
the  manufacture  of  his  particular  product.  The  warning  should  be 
issued  that  unless  the  work  of  testing  is  done  systematically  much 
of  it  will  be  done  without  avail  and  great  loss  of  time  will  follow. 

CLASSIFICATION  OF  PARTS. 

I  have  usually  found  it  possible,  and  strongly  advisable,  to  divide 
into  groups  or  classifications  the  parts  which  are  to  be  manufactured 
according  to  these  new  methods.  The  first  separation  which  would 
occur  to  any  one  would  be  that  according  to  the  quality  of  metal  used. 
The  second  grouping  will  depend  altogether  upon  the  article  that  is 
being  manufactured.  Generally  it  will  be  found  perfectly  practicable 
to  make  a  second  series  of  classifications  depending  upon  the  similarity 
of  design,  shape,  and  mechanical  operations  necessary.  Of  course 
where  parts  are  of  the  same  genus  but  of  different  sizes,  this  is  a  com- 
paratively simple  proposition;  but  it  will  generally  be  found  upon 
analysis  that  even  a  further  classification  can  be  made  under  which 
these  groups  can  be  still  reduced  by  considering,  as  stated  above, 
design  and  similarity  of  operation. 

I  have  in  mind  one  shop  which  required  hi  the  course  of  building, 
assembling,  and  making  the  machines  the  production  of  some  9,000 
parts.  However,  by  a  thorough  system  of  analysis  and  classification, 
it  was  found  possible  to  group  these  9,000  parts  into  less  than  250 


STANDARD   TIMES   FOE   MACHINING  85 

classifications.  It  was  thus  possible  to  get  a  clear  idea  of  what  should 
be  accomplished  on  these  9,000  pieces  through  the  results  of  the  250 
tests  made  in  a  thorough  manner.  While  it  was  probably  true  that 
the  deductions  made  from  these  tests  were  not  in  all  cases  as  thor- 
ough as  would  have  resulted  from  individual  tests,  at  the  same  time 
this  plan  simplified  a  tremendous  problem  and  enabled  the  concern 
to  get  a  much  quicker  start  on  the  right  road  than  if  a  haphazard 
method  of  testing  these  9,000  pieces  had  prevailed. 

In  studying  the  question  of  production  in  regard  to  any  tool,  we 
must  consider  not  only  the  efficiency  of  the  machine  tool  and  the  cut- 
ting tool,  but  also  the  time  that  it  takes  to  set  up  the  job  on  the 
machine  tool  in  the  first  place.  It  is  quite  probable  that  a  critical 
examination  of  the  way  of  setting  up  the  work  usually  practised  will 
prove  that  the  method  used  is  capable  of  alterations  which  will  result 
in  a  surprising  saving  of  time.  A  thoroughly  scientific  method  of 
setting  up  the  job  usually  results  in  a  saving  of  30  to  50  per  cent  in 
the  time  required  by  the  average  workman.  It  is  therefore  necessary 
to  study  this  question  at  the  start,  as  the  test  is  being  made,  and  pre- 
pare a  list  of  instructions  giving  the  different  operations  required  in 
detail  and  the  length  of  time  that  should  be  taken  under  ordinary 
conditions  to  accomplish  this  job  of  setting  up.  This  determination 
of  setting-up  time  should  not  be  left  for  future  tests,  but  should  be 
done  right  at  the  beginning,  for  if  it  is  not  done  then,  the  chances  are 
it  never  will  be  done.  It  is  easier  to  do  it  at  the  time  of  the  test  than 
at  any  other  time. 

Again,  we  must  consider  the  time  required  to  handle  the  parts, 
especially  if  they  be  small  so  that  they  can  be  clamped  hi  and  taken 
out  of  the  machine  tool  hi  the  shortest  possible  space  of  time.  A 
thorough  study  of  this  one  problem  should  be  made  at  this  particular 
period.  The  importance  of  this  is  much  greater  than  is  usually 
apparent,  especially  on  parts  of  small  dimensions. 

A  short  time  ago,  I  noted  with  particular  care  a  workman  oper- 
ating a  lathe  on  a  large  number  of  small  pieces  hi  a  shop  where  the 


86 


PROFIT-MAKING    MANAGEMENT 


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STANDARD   TIMES   FOR   MACHINING  87 

manufacture  of  small  parts  prevailed.  The  machine  tool  itself  was 
well  speeded  up  and  the  production  was  quite  rapid.  It  was  an  actual 
fact,  however,  that  the  time  consumed  by  the  workman  in  taking  out 
his  finished  piece  and  fastening  in  the  machine  tool  the  piece  to  be 
worked  upon,  exceeded  by  quite  an  appreciable  percentage  the  actual 
length  of  time  required  for  the  machine  operation  of  cutting. 

While  this  may  to  the  inexperienced  man  seem  to  be  insignificant, 
at  the  same  time  the  determination  of  these  points  is  of  the  greatest 
value,  especially  under  such  conditions  as  outlined  above,  because  of 
the  fact,  as  stated  before,  that  "tune  is  what  we  pay  for."  Every- 
thing possible  should  be  done  to  cut  down  that  element  of  time  all 
through  the  shop  processes. 

Before  starting  any  tests,  care  should  be  taken  to  see  that  there  is 
provided  a  cut  meter  for  measuring  the  cutting  speeds,  that  the  belts 
are  all  in  good  condition,  and  that  the  proportion  of  pulley  speeds 
is  carefully  checked  up.  The  depth  of  cut  should  be  very  carefully 
measured,  and,  as  stated  before,  care  should  be  taken  to  see  that  you 
have  tools  of  uniform  character  and  plenty  of  them.  Even  at  risk  of 
reiteration,  I  want  to  emphasize  the  importance  of  this  provision  being 
made  in  advance. 

Whatever  the  condition  of  your  shop  and  whatever  the  system  of 
management,  it  is  altogether  probable  that  an  expert  tester  will  be 
absolutely  necessary.  This  man  should  be  one  who  is  totally  removed 
from  the  influence  of  the  foremen  or  any  of  the  workmen.  He  should 
when  possible  be  placed  in  some  part  of  the  factory  where  he  can 
work  practically  unobserved  and  certainly  undisturbed.  Wherever  his 
tests  are  made — specially  or  in  the  shop — his  reports  should  be 
carefully  checked  up  and  should  be  invariably  sent  to  the  head  office, 
he  being  given  to  understand  that  he  is  responsible  to  the  officers 
alone.  The  importance  of  having  an  expert  of  this  character  lies  not 
only  in  the  necessity  of  securing  accurate  tests  upon  which  you  can 
depend,  but  also  upon  the  absolute  necessity  of  training  up  some  man 
who  can  properly  analyze  the  possibilities  of  production,  fill  out  the 


88 


PROFIT-MAKING    MANAGEMENT 


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"8       • 


STANDARD   TIMES    FOR    MACHINING  89 

proper  instructions,  and  be  in  a  position  to  see,  as  speed  boss,  that 
the  men  are  thoroughly  informed  as  to  the  methods  to  be  adopted  in 
proving  the  results  which  his  tests  show  possible.  It  is  absolutely 
necessary  that  you  be  in  a  position  to  demonstrate  to  your  workmen 
that  work  can  be  done  in  the  time  set  for  it,  by  actual  demonstration. 
No  one  can  do  this  better  than  this  expert  tester,  and  no  one  would 
be  hi  a  better  position  to  show  the  workmen  how  to  accomplish  the 
result  himself.  A  man  in  this  position  should  not  only  have  a  high 
degree  of  ability  as  a  mechanic,  but  should  also  possess  a  goodly 
amount  of  tact. 

TABLE  OP  PLANER  SPEEDS  ON  BESSEMER  PLATES. 

Speed  in  Feet.         Feed  on  Different  Thicknesses  of  Plates  in 
Planer  Inches. 

Number.              Cut.          Return.           1                     J                     £  f 

.09  .12  .18 

.045  .06  .09 

.045  .06  .09 

.075  .1  .15 

.075  .1  .15 

.055  .062  .11 

Tool  to  be  ground  at  the  end  of  one  hour  and  thirty  minutes  on  the  Bessemer  plates. 

The  tables  presented  on  pages  86  to  90  show  the  best  results,  to  my 
knowledge,  to  be  obtained  on  first-class  machine  tools,  such  as  lathes,* 

*  The  data  on  lathe  work  represent  the  result  of  experiments  made  by  Mr.  F.  W. 
Taylor  and  his  associates  and  were  presented  before  the  American  Society  of  Mechan- 
ical Engineers  in  his  paper  on  the  Art  of  Cutting  Metals.  The  data  are  presented 
with  Mr.  Taylor's  consent  and  are  the  most  comprehensive  and  valuable  of  any  so 
far  presented  to  the  manufacturing  public,  to  my  knowledge.  The  data  confirm 
throughout  in  a  very  striking  manner  the  experiments  performed  in  factories  under 
my  direction.  They  are,  however,  more  complete  than  the  tests  made  under  my 
supervision. 

Our  tests  on  lathes,  planers,  punches  and  dies  were  made  with  both  the  Novo 
high-speed  steel  of  Herman  Boker,  N.  Y.,  and  the  Bohler  new  rapid  steel  of  Hough- 
ton  and  Richards,  Cleveland,  Ohio,  from  both  of  which  we  have  secured  most  excel- 
lent and  uniform  results.  The  drilling  data  were  compiled  from  a  series  of  tests 
made  in  our  own  shops  with  drills  manufactured  by  the  George  H.  Rich  Manufactur- 


1—  (  82) 

19 

77 

.06 

2—  (767) 

30 

97 

.03 

3—  (793) 

30 

88 

.03 

4—  (  96) 

22 

45 

.05 

5—  (107) 

22 

45 

.05 

6—  (  98) 

28 

52 

.036 

90  PROFIT-MAKING    MANAGEMENT 

TABLE  OF  SPEEDS  AND  FEEDS  ON  DRILLS.* 
Size,  Inches.  Speed.  Feed 

i  430  .018 

f  330  .019 

|  280  .019 

J  255  .019 

1  250  .020 
1J  245  .020 
1J  240  .020 
If  230  .020 
H  210  .020 
If  200  .020 
1|  195  .020 
1J  190  .020 

2  180  .020 

planers,  shapers,  drilling  machines.  Without  some  such  standard 
guide,  the  proposition  of  making  a  series  of  standard-time  tests  in 
the  ordinary  factory  is  indeed  a  very  difficult  one.  The  results  shown 
in  the  tables  may  not  in  all  points  prove  to  be  the  limit  as  far  as  pro- 
duction is  concerned ;  but  they  represent  the  best  so  far  obtained,  and 
are  far  hi  excess  of  those  usually  secured,  so  that  they  can  be  safely 
used  as  a  basis  upon  which  to  work  and  they  make  the  determination 
of  the  best  tune  hi  which  a  job  should  be  done  a  comparatively  simple 
matter,  as  concerns  the  machine  work  alone.  Inasmuch,  however,  as 
they  were  obtained  under  first-class  conditions,  the  state  of  the  exist- 
ing machinery  in  the  average  shop  will  render  a  modification  of  these 
rules  and  tables  quite  necessary.  It  is  for  this  reason  that  the  investi- 
gation of  existing  machinery  (referred  to  in  Chapter  VI)  must  be 
undertaken  first,  and  the  tabulations  so  modified  as  to  apply  to  the 
existing  circumstances. 

ing  Co.,  Buchanan,  Mich.  The  tests  on  planing  and  drilling  tools  were  made  under 
the  direct  supervision  of  the  factory  manager  of  the  Herring-Hall-Marvin  Safe  Co., 
Mr.  E.  E.  Watson. 

*Tests  made  in  shops  of  Herring  Hall-Marvin-Safe  Company  upon  which  cast  iron, 
using  drills  manufactured  by  Rich  Manufacturing  Company,  Buchanan,  Mich. 


STANDARD   TIMES    FOR   MACHINING  91 

By  the  use  of  tables  on  lathe  work  similar  to  those  prepared  by 
Mr.  Taylor,  I  have  been  enabled  in  several  cases  to  make  large 
reductions  in  the  force  of  machine  hands.  In  one  instance  several 
years  ago,  the  introduction  of  a  speed  boss  skilled  in  the  use  of  these 
data  resulted  in  cutting  down  a  machine  force  of  63  men  to  22  men 
within  a  period  of  3|  weeks.  In  another  case,  a  reduction  of  over 
50  per  cent  in  a  large  machining  department  was  secured  within  5 
weeks  of  the  time  these  tables  had  been  placed  hi  the  hands  of  an 
efficient  foreman  and  measures  taken  to  see  that  stock  was  furnished 
to  his  machines  promptly.  In  another  case  a  simple  system  of  using 
the  tables  made  it  possible  to  reduce  the  number  of  planers  from  19 
to  13.  Even  with  this  reduction,  the  remaining  13  planers  gave  a 
much  larger  output  than  had  formerly  been  secured  from  19. 

A  systematic  use  of  the  tables  on  the  drilling  machines  produced 
even  more  surprising  results.  In  several  cases  within  my  own  expe- 
rience a  reduction  in  prices  of  over  50  per  cent  was  made  possible, 
and  in  one  particular  case  a  reduction  of  even  75  per  cent. 

Of  course  the  possibilities  of  saving  in  any  one  shop  would  depend 
upon  the  production  conditions  existing  at  the  time  the  tests  and 
examinations  were  made,  but  it  is  safe  to  say  that  large  economies 
will  result  if  such  tables  can  be  put  in  effective  use  in  a  manufacturing 
shop. 

I  have  brought  out  previously  the  importance  of  classifying  all 
of  the  manufactured  parts  so  that  attention  can  be  concentrated  upon 
those  which  are  truly  representative  of  each  separate  classification. 
And  in  determining  the  best  place  of  attack  in  the  classification  it  is 
well  to  remember  that,  in  the  average  shop,  there  is  usually  at  least 
one  point  which,  through  bad  equipment  or  ineffective  direction,  is 
practically  retarding  shop  progress  throughout.  With  ordinary  fore- 
manship  it  is  almost  impossible  to  discover  the  existence  of  such  con- 
ditions. The  Tool-Room  Committee  and  the  tester,  who  is  destined  to 
become  later  the  speed  boss,  should  therefore  first  determine  the  classi- 
fications and  the  best  point  of  attack.  After  time  calculations  have 


92  PROFIT-MAKING    MANAGEMENT 

been  made  and  approved  by  the  Committee,  with  the  aid  of  the  tables 
just  given,  they  should  be  placed  on  record  cards  (which  will  be  con- 
sidered later)  to  be  confirmed  by  the  tester  in  actual  trials. 

It  is  important,  however,  to  note  that  in  the  manufacture  of  either 
single  large  pieces  or  many  small  parts,  there  are  a  number  of  ele- 
ments entering  into  the  cost  of  production,  other  than  that  of  ma- 
chining, which  are  always  of  sufficient  importance  to  merit  the  closest 
consideration.  In  fact,  very  often  it  is  the  lack  of  attention  to  these 
other  factors  that  accounts  for  much  lost  time.  This  is  particularly 
the  case  where  large  quantities  of  small  parts  are  manufactured,  each 
part  in  itself  requiring  but  a  slight  machining  operation. 

Almost  without  exception  the  tables  which  have  been  so  far  pre- 
sented represent  machining  of  rather  large  bodies,  while  in  many  cases 
in  actual  manufacture  the  problem  is  one  of  the  turning  out  of 
product  of  small  dimensions.  The  question  of  "handling  time"  in 
this  case  becomes  of  paramount  importance.  This  brings  us  at  once 
to  a  consideration  of  the  following  requirements,  all  of  which  must 
be  considered  by  the  committee,  whether  the  pieces  or  the  quantity 
be  large  or  small : 

1. — There  must  be  ample  stock  delivered  to  the  workman  before 
he  stops  work  upon  his  preceding  job.  This  is  an  item  of  practice 
which  will  in  itself  bring  surprisingly  large  returns  in  efficient  pro- 
duction. In  fact,  if  nothing  more  were  accomplished  than  the  con- 
stant supplying  of  the  workman  with  plenty  of  stock,  under  a  good 
routing  system,  and  plenty  of  good  tools  of  standard  shape  and  prop- 
erly hardened,  the  efficiency  of  the  average  shop  would  be  increased 
probably  33  J  per  cent.  This  question  will  be  dealt  with  later,  but 
reference  may  be  made  to  my  articles  upon  stock  system  routing  and 
stock  tracing — in  which  particular  emphasis  is  laid  upon  the  stock 
tracer,  his  work,  and  his  authority — and  upon  inspection,  etc.,  in  THE 
ENGINEERING  MAGAZINE,  May,  June,  1902. 

2. — The  stock  must  be  so  placed  as  to  be  most  easily  reached  or 
handled  by  the  workman.  This  presupposes  a  standard  place  for  the 


STANDARD  TIMES   FOB   MACHINING  93 

stock.  In  the  case  of  large,  heavy  pieces,  standard  handling  devices 
must  be  provided. 

3. — The  clamping  devices  must  be  simple,  effective,  and  standard, 
and  must  be  supplied  to  the  workman  before  he  is  ready  to  start. 
Much  study  may  be  given  profitably  to  this  point. 

4. — The  tools  must  be  standard  in  every  respect,  ground  to  proper 
shapes  and  must  be  supplied  to  the  workman  before  he  is  ready  to 
start  his  work. 

5. — The  jigs,  fixtures,  punches,  dies,  gauges,  etc.,  must  be  so 
designed  as  to  be  handled  easily,  quickly,  and  accurately,  and  must  be 
at  the  workman's  side  before  he  is  ready  to  begin  work  upon  his  new 
job.  Much  profitable  study  can  be  given  to  the  question  of  proper 
tools.  These  tools  and  gauges  must  be  inspected  for  accuracy  regu- 
larly so  that  the  foreman  and  workman  may  have  full  confidence  hi 
them. 

6. — All  stock  coming  into  a  department  from  some  other  depart- 
ment must  be  inspected  before  it  is  placed  upon  the  department  plat- 
form. Whether  the  work  is  large  or  small,  inspection  is  absolutely 
necessary.  For  further  details  on  this  matter  it  may  prove  of  interest 
to  note  the  rather  full  treatment  of  the  subject  of  inspection  in  my 
articles  appearing  in  THE  ENGINEERING  MAGAZINE  hi  1902. 

Full  mention  is  made  of  the  requirements  at  this  point  for,  while 
some  of  them  are  far  removed  from  the  single  problem  of  machining, 
they  still  form  a  most  vital  part  of  the  "  time  required  to  complete  a 
job/'  and  most  certainly  no  "standard"  or  ''shortest"  time  can  ever  be 
reached  unless  they  are  considered  and  standard  methods  in  each  case 
installed.  And  again  they  must  be  considered  when  we  attempt  to 
set  a  "standard  time"  upon  assembling  jobs. 


CHAPTER  IX. 
STANDARD  TIMES  FOR  HANDLING  THE  WORK. 

RANTING  that  the  six  requirements  stipulated  in  the  preceding 
chapter  have  been  fulfilled — that  is,  that  stock  is  provided  in 
ample  quantity,  that  standard  places  are  provided,  standard  clamp- 
ing devices,  tools,  jigs  and  fixtures  introduced,  and  inspection  estab- 
lished— we  next  come  to  the  consideration  of: — 

1. — The  time  required  to  handle  the  part  or  parts. 

2. — The  time  required  to  "set  up"  the  job. 

3. — The  time  required  to  machine  the  work  (to  gauge  or  draw- 
ing). 

4. — The  time  required  to  remove  the  work. 

In  making  any  study  of  the  time  required  on  these  different  parts 
of  a  job,  an  accurate  stop  watch  should  be  used.  One  with  two  hands, 
either  of  which  may  be  stopped  while  the  other  continues  to  run,  is 
the  best  type.  It  is  especially  valuable  in  noting  the  time  required  for 
some  particular  portion  of  the  work  itself,  by  stopping  one  of  the 
hands  and  then  noting  the  actual  time  lost  between  the  essential  por- 
tions of  the  operations  as  shown  by  the  elapsed  time  indicated  by 
stoppage  of  the  other  hand.  This  is  particularly  useful  in  noting  the 
operations  of  assembling.  Some  uniform  tabulation  in  recording 
experiments  or  conclusions  should  be  used  from  the  start.  The 
records  submitted  are  suggestive  only,  but  contain  the  essential 
points.  The  proper  forms  must  be  evolved  for  each  case.  Features 
non-essential  in  one  concern  may  be  very  important  hi  another;  e.  g., 
"setting  up,"  a  job  which  hi  some  types  of  manufacturing  may  be 
relatively  important,  while  in  others  it  is  a  very  simple  one.  The  same 
statement  can  be  made  with  especial  emphasis  in  regard  to  machining, 

94 


STANDARD   TIMES   FOE   HANDLING  95 

particularly  as  regards  the  production  of  stock  on  automatic  ma- 
chines, such  as  screw  machines,  or  semi-automatics,  such  as  turret 
lathes. 

THE  DETERMINATION  OF  HANDLING  TIME. 

The  time  required  to  handle  the  parts  is  an  important  considera- 
tion, whether  the  tool  be  a  lathe,  planer,  mill  punch  press,  or  drill 
press.  An  astonishingly  large  proportion  of  lost  time  can  be  attrib- 
uted to  lack  of  proper  facilities  for  handling  work,  lack  of  methods  in 
handling  it,  and  the  tendency  of  the  workman  to  kill  time  during  the 
period  which  offers  so  good  an  opportunity.  In  the  case  of  heavy 
work  it  will  always  pay  to  have  good  hoisting  and  handling  facilities 
over  each  tool.  They  may  take  the  form  of  compressed-air  hoists  or 
an  overhead  single  track  carrying  an  electric  hoist  serving  a  number 
of  machines — a  very  economical  arrangement.  In  some  cases  the  use 
of  specially  designed  magnetic  hoists  will  greatly  facilitate  such  work. 
Close  attention  should  be  paid  to  the  clamping  devices,  so  that  little 
time  will  be  lost  in  attaching  to  or  loosening  from  the  part.  A  care- 
fully considered  and  standard  method  of  piling  or  placing  the  parts 
will  often  enable  this  clamping  to  be  done  very  quickly. 

In  the  handling  of  light  work  there  are  several  points  of  import- 
ance that  must  be  considered. 

Wherever  possible  the  stock  should  be  carried  hi  boxes.  These 
boxes  should  be  standardized  so  that  as  few  sizes  as  possible  need  be 
used.  They  should  contain  tin  pockets  on  the  side  in  which  the 
necessary  cards  can  be  placed.  In  many  cases  it  pays  to  arrange 
the  boxes  with  movable  shelves  so  that  the  stock  can  not  only  be 
easily  handled  but  can  be  much  better  protected  hi  carrying  it  through 
the  shop.  Stock  requiring  close  work  is  often  injured  through  bruis- 
ing. Again,  such  a  method  makes  the  removal  of  the  stock  from  the 
box  by  both  the  machine  hand  and  the  inspector  much  simpler. 

Careful  judgment  should  be  used  in  selecting  the  place  where  the 
box  shall  stand.  Very  often  a  low,  strong  table  about  the  height  of  the 
ordinary  hand  truck  will  be  found  advisable.  The  use  of  this  table 


96 


PROFIT-MAKING    MANAGEMENT 


TESTING  RECORDS. 


Date 

Machine  Tool 
Cutting  Tool 

Setting  Up  Time  (analyzed). 


Name  or  No.  of  Part 
Classification 
Quality  of  Metal 
No.  of  parts  tested 


•3-2 


g^lll 

Q"o 


o/v 

" 


GENERAL 


Standard  Time  for  Setting  Up  (see  instructions) 
Standard  Time  for  Handling  Parts  (see  instructions) 

Standard  Depth  of  Cut 

Standard  Feed 

Standard  Cutting  Speed 

Note.  Tool  to  be  so  speeded  that  cutting  tools  will  require 
regrinding  at  the  end  of  1J  hrs.  run  if  limitations  of  machine 
tools  will  permit. 


FORM  SUITABLE  FOR  TESTING  RECORDS. 

immediately  standardizes  the  spot  where  the  stock  shall  be  placed, 
makes  it  easier  for  the  truckers  to  handle  the  boxes,  and,  in  addition 
to  this,  saves  the  work  and  time  of  the  machine  hand  in  stooping  over 
to  pick  the  parts  out  of  the  box.  The  placing  of  these  boxes  in  the 
same  position  each  time — the  fact  that  the  workman  becomes  accus- 


STANDARD   TIMES    FOR    HANDLING  97 

tomed  to  finding  his  stock  always  in  the  same  spot — adds  appreciably 
to  the  speed  of  handling. 

In  the  space  beneath  this  table  there  can  usually  be  placed  an 
additional  shelf  to  contain  the  tool  boxes  for  the  different  jobs  which 
will  be  apportioned  to  the  workman. 

If  this  rule  of  carefully  standardizing  the  place  before  each  machine 
where  stock  is  to  be  placed  is  adopted,  the  question  of  determining 
the  handling  time  becomes  comparatively  simple.  A  series  of  stop- 
watch tests  upon  a  quick-moving  workman  will  usually  be  found  to 
be  sufficiently  accurate.  It  is  well,  however,  to  check  this  up  by 
actual  trial  on  the  part  of  the  tester.  Full  data  relative  to  each  test 
should  invariably  be  placed  upon  the  record  cards. 

SETTING-UP  TIME. 

The  "setting"  up  of  jobs  on  lathes,  planers,  shapers,  milling  machines, 
punch  presses,  drill  presses  is  so  varied  that  no  set  rules  can  be  laid 
down  relative  to  it.  A  close  study  of  all  the  conditions  under  each 
classification  of  work  is  very  necessary.  Tests  should  be  made  with 
stop-watch  observations  covering  each  portion  of  the  setting-up  job. ' 
When  this  is  first  attempted,  it  will  be  found  almost  invariably  that 
the  clamping  devices  for  the  different  tools  can  be  very  greatly 
improved. 

If  the  time  of  the  ordinary  workman  in  setting  up  certain  jobs 
is  noted  carefully,  and  then  the  same  jobs  are  selected  for  analyses, 
very  surprising  differences  between  the  time  that  he  has  required  and 
the  time  that  should  be  required  will  be  found  to  exist.  It  being  out 
of  the  question  for  any  one  man  to  determine  the  best  methods  of 
procedure  in  the  setting  up  of  jobs,  it  is  therefore  wise  to  submit  this 
entire  matter  to  the  Tool  Room  Committee,  calling  in  to  such  meet- 
ings the  several  foremen  and  assistant  foremen  whose  departments 
are  affected.  The  mere  fact  of  calling  men  in  for  such  important 
discussions  will  lead  not  only  to  correct  conclusions,  but  will  also 
act  as  a  spur  on  them  toward  the  improving  of  the  setting-up  con- 


98  PROFIT-MAKING   MANAGEMENT 

ditions  on  the  machines  in  their  several  departments.  In  fact,  I  am 
in  favor  of  special  men  to  set  up  work  requiring  a  particular  degree 
of  accuracy.  This  is  particularly  so  in  the  case  of  fine  punch-press, 
die,  and  milling  work.  A  full  record  of  all  the  analyses  of  setting-up 
time  should  be  made  upon  cards  at  the  time  of  each  test. 

TIME  FOR  HANDLING  WORK  ON  THE  MACHINE  TOOLS. 

In  the  case  of  large  work  on  lathes  and  planers,  the  time  of  handling 
the  work  on  the  machine  tool  is  of  minor  importance,  inasmuch  as 
the  work  remains  fixed  until  the  machining  operations  are  performed 
upon  it.  Conditions,  however,  are  different  in  the  case  of  drill-press 
work  and  punch-press  work. 

The  handling  of  heavy  work  under  a  drill  press,  where  a  number 
of  holes  have  to  be  drilled  at  different  points  in  the  piece  of  work, 
becomes  quite  a  problem.  Of  course,  radial  drills  are  in  most  cases 
used  for  such  work.  In  my  opinion,  however,  the  average  modern 
radial  drill  is  not  built  strongly  enough  to  withstand  the  heavy  work 
which  can  be  secured  from  a  high-grade,  high-speed  drill  if  it  is 
pushed  to  the  limit.  Better  results  will  be  obtained  by  the  construc- 
tion of  a  heavy  drill  press,  with  stationary  overhanging  arm,  the  work 
to  be  moved  upon  a  double-acting  table  having  two  movements,  one 
at  right  angles  to  the  other. 

Rapid  drilling  in  a  shop  is  very  necessary.  It  is,  of  course,  im- 
portant from  the  standpoint  of  economy  hi  drilling,  but  the  main 
feature  to  be  considered  is  the  fact  that  when  work  is  sent  to  the 
drills,  nine  times  out  of  ten  it  is  then  in  steady  progress  of  manufac- 
ture throughout  the  shop  and  under  ordinary  conditions,  some  one 
group  of  workmen  will  be  found  waiting  for  the  drilling  opera- 
tions to  be  finished.  This  waiting  may  not  be  at  all  apparent,  for 
the  workmen  themselves  are  very  careful  to  conceal  any  such  fact; 
but  undoubtedly  much  time  is  lost  in  the  average  shop  because  of  lack 
of  high  speed  in  the  drilling  operations. 

Whatever  device  is  adopted  for  the  handling  of  work,  very  care- 


STANDARD   TIMES   FOR   HANDLING  99 

ful  observation  should  be  taken  in  order  to  determine  the  actual  time 
lost  in  this  manner.  In  punch-press  work  this  handling  time  becomes 
even  more  important,  inasmuch  as  hi  innumerable  cases  there  are  a 
number  of  holes  to  be  punched  in  one  plate  or  strip  of  metal.  A  very 
close  study  can  profitably  be  made  of  the  proper  types  of  movable 
tables  with  indexes  and  positive  stops.  In  fact,  with  a  carefully 
designed  series  of  stops  for  the  different  classes  of  work,  a  great  deal 
of  time  ordinarily  consumed  hi  laying  off  the  holes  for  punching  can 
be  saved.  The  use  of  such  devices  also  insures  greater  accuracy  in 
the  punching.  Ordinarily,  the  work  of  the  punch-press  operator  is 
not  as  accurate  as  it  should  be,  especially  on  heavy  work.  Where  this 
inaccuracy  exists,  it  causes  an  immense  amount  of  trouble  throughout 
the  shop. 

In  the  turning  out  of  small  parts,  the  question  of  handling  tune 
becomes  of  paramount  importance.  The  amount  of  tune  consumed, 
for  instance,  in  placing  small  work  in  a  drilling  jig,  clamping  the 
jig,  handling  the  jig,  and  taking  work  out,  will  often  be  two  or  even 
three  times  the  tune  required  to  do  the  actual  machining  operation. 
Therefore  a  close  study  should  be  made,  first,  of  the  character  of 
these  special  tools,  with  a  view  to  reducing  to  a  minimum  the  handling 
time  of  the  work  and  to  replacing  any  tools  which  require  an  exces- 
sive amount  of  such  time.  Granting  that  the  tools  are  all  that  they 
should  be,  a  study  of  the  time  that  should  be  taken  by  an  expert 
workman  then  becomes  important.  This  can  be  settled  by  stop-watch 
observations  and  by  tests.  All  data  covering  such  points  should  be 
recorded  immediately. 

TIME  FOR  MACHINING  OPERATIONS. 

This  time  can  be  determined  from  the  tables  herewith  presented,  by 
the  Committee  and  the  tester  together  with  the  foremen  and  assistant 
foremen  of  the  departments  interested.  Then  this  determination  of 
tune  should  be  checked  up  upon  each  piece  representing  each  classi- 
fication by  actually  trying  out  the  job  as  an  object  lesson,  if  for  no 


100  PROFIT-MAKING    MANAGEMENT 

other  reason.     Later,  the  proper  machining  time  for  the  parts  under 
each  classification  can  be  determined  from  the  tables  themselves. 

My  reason  for  strongly  recommending  Committee  action  hi  con- 
junction with  the  foremen  will  be  discussed  later,  but  a  moment's 
thought  at  this  point  will  show  that  this  line  of  procedure  will  force 
the  obstinate  recalcitrant  foreman  into  line  in  a  hurry.  He  must  give 
his  support  to  the  line  of  action.  He  is  helpless  as  far  as  opposition 
is  concerned.  Furthermore,  an  improvement  hi  the  several  depart- 
ments under  each  foreman's  supervision  will  become  evident  almost 
immediately.  I  consider  this  joint  Committee  action  as  absolutely 
necessary  to  the  success  of  the  plan.  Always  keep  in  mind  that  a 
speed  boss  or  tester  will  be  in  a  position  to  prove  that  work  can  be 
done  within  the  specified  time.  Keep  in  mind  however  that  it  is 
always  necessary  to  correct  promptly  any  errors  that  may  occur  and 
that  the  workmen  can  demonstrate  do  exist. 

TIME  FOR  REMOVING  WORK  FROM  MACHINE  TOOLS. 

If  the  problem  of  handling  the  work  originally  is  properly  solved, 
the  further  problem  of  determining  the  proper  time  to  be  taken  in 
removing  work  will  be  solved.  The  same  problem  of  simple  and  effec- 
tive clamps  and  efficient  methods  of  hoisting  and  lowering  work 
appear  here.  It  is,  however,  necessary  to  emphasize  the  necessity 
for  piling  the  work  on  the  floor  or  on  platforms  hi  such  a  manner 
that  it  can  be  easily  handled  by  the  moving  trucks.  In  the  handling 
of  light  work  it  will  often  pay  to  give  considerable  attention  to  the 
problem  how  best  to  put  the  work  into  the  boxes  so  as  to  facilitate 
its  handling,  to  protect  it  from  being  marred,  to  facilitate  inspection, 
and  to  make  it  easy  for  the  next  operator  to  handle  it  promptly.  The 
relative  importance  of  these  different  operations,  however,  varies 
very  greatly  according  to  the  character  of  the  work.  What  may 
be  the  most  important  feature  of  one  class  of  work  becomes  almost 
a  non-essential  in  another  class. 


CHAPTER  X. 
STANDARD  TIMES  FOR  ASSEMBLING. 

^T^HE  study  of  the  proper  time  in  which  to  do  assembling  work  is 
•*•  peculiarly  difficult.  It  is  a  far  more  puzzling  proposition  than 
the  one  of  analyzing  and  determining  the  proper  time  in  which  any 
particular  part  should  be  machined.  The  element  of  human  judg- 
ment and  human  skill  enters  so  largely  into  assembling  that  even 
the  closest  study  will  at  times  fail  to  give  an  altogether  scientific 
analysis  of  the  quickest  time  in  which  any  particular  job  should  be 
performed.  After  a  workman  has  been  on  an  assembling  job  for  a 
number  of  years,  his  operations  become  automatic  and  can  be  made 
at  a  rate  of  speed  that  cannot  be  equalled  by  any  man  whom  the 
superintendent  may  elect  to  "try  out"  the  job,  unless  he  has  had 
almost  an  equal  term  of  experience.  A  study  with  the  stop  watch 
of  the  length  of  time  required  by  the  workman  will  often  prove  almost 
fruitless,  because  if  the  man  has  the  slightest  suspicion  that  he  is 
being  checked  up,  he  will  immediately  slow  his  pace.  If  the  job  is 
already  on  piece  work,  the  proposition  becomes  an  especially  difficult 
one,  for  the  workman  well  knows  how  to  keep  down  his  rate  of  pro- 
duction while  apparently  keeping  up  a  high  rate  of  speed.  It  is  for 
this  reason  that  the  study  of  assembling  work  requires  particular 
care  and  especially  keen  analysis. 

Space  prevents  any  discussion  of  the  essential  features  of  the 
proper  organization  of  an  assembling  room  at  this  point.  I  will,  how- 
ever, emphasize  the  important  feature  that  hi  the  assembling  of 
articles  composed  of  many  intricate  parts  it  is  highly  advisable  to 
separate  the  assembling  operations  for  any  particular  job  into  as 
small  a  number  as  possible.  If  the  workman  can  be  confined  to  two, 

101 


102  PROFIT-MAKING   MANAGEMENT 

or  at  the  most  three, operations  the  problem  is  not  a  difficult  one;  but 
where,  as  in  many  cases,  the  assembler  will  have  from  eight  to  ten 
different  operations  on  a  particular  part,  the  solution  becomes  very 
difficult  to  find.  Because  of  this  very  difficulty,  it  becomes  of  extreme 
importance  that  some  solution  be  reached,  as  the  waste  of  time  in  the 
ordinary  assembling  department  of  the  average  manufacturing  con- 
cern is  almost  beyond  belief.  The  only  method  of  procedure  that  I 
have  made  a  success  of  is  as  follows: 

1. — Classify  all  the  work,  as  was  suggested  hi  the  case  of  those 
parts  which  are  to  be  machined. 

2. — Select  the  most  skilful  workman  in  whom  you  can  have  con- 
fidence. It  will  be  necessary  to  make  him  an  assistant  foreman  and 
hold  forth  to  him  promise  of  future  promotion,  if  the  desired  results 
are  to  be  secured.  This  removes  him  from  the  influence  of  the  work- 
men and  has  a  direct  effect  upon  the  problem.  The  workmen  will 
rarely  resent  a  thorough  investigation  made  by  a  man  under  the 
title  of  assistant  foreman,  but  will  invariably  bring  severe  pressure  to 
bear  upon  the  ordinary  workman  who  attempts  such  work,  in  order  to 
force  hun  to  use  the  lowest  pace  possible  without  detection. 

3. — Place  before  the  Committee,  the  testing  assemblers,  and  the 
head  of  the  assembling  room,  the  different  jobs  as  classified  and 
analyze  then*  elements  to  the  last  degree. 

4. — It  would  be  well  at  this  point  to  make  some  close  observations 
upon  the  workmen  who  are  engaged  on  this  work.  It  will,  however, 
be  necessary  to  use  the  stop  watch  skilfully  so  that  the  time  required 
to  perform  the  elements  of  each  operation  can  be  recorded  as  far  as 
may  be  possible.  With  the  calculated  analyses  of  the  elements  of  the 
work,  and  the  actual  record  as  made  by  the  workman,  before  the 
Committee,  it  is  then  necessary  to  plan  a  comprehensive  method  to  be 
pursued  in  the  testing  of  the  work  and  in  the  regular  assembling  oper- 
ations to  be  done  by  the  assembling  department  in  the  future. 

It  will  very  often  be  found  wise  and,  in  fact  necessary  to  classify 
the  work  on  the  separate  jobs  in  a  different  manner  from  that  ordi- 


STANDAKD   TIMES   FOR   ASSEMBLING  103 

narily  pursued,  so  that  each  assembler  will  perform  only  a  portion  of 
the  work  that  he  formerly  did  in  its  entirety.  This  action  makes  it 
easier  to  demonstrate  to  the  men  that  the  work  can  be  done  within  the 
specified  time  and  also  assists  in  putting  it  beyond  then*  power  to 
conceal  the  best  results  obtainable. 

5. — In  making  these  tests,  it  is,  of  course,  essential  to  surround  the 
tester  with  the  best  possible  conditions.  It  is,  however,  necessary  to 
keep  in  mind  that  your  assembling  room  must  be  so  arranged  that 
the  same  conditions  can  prevail  in  everyday  manufacture.  These  con- 
ditions may  be  specified  as  follows: 

a.  All  the  work  should  come  to  the  tester  or  the  assembler 
properly  inspected  so  that  the  accuracy  of  the  previous  operations  can 
be  assured. 

b.  All  the  parts  that  are  to  be  assembled  must  be  conveniently 
arranged  hi  logical  order.    All  necessary  rivets  and  screws  and  tools 
of  all  descriptions  must  be  placed  at  a  point  convenient  to  the  work- 
man and  within  his  reach  so  that  the  least  amount  of  effort  is  re- 
quired to  handle  them. 

c.  Wherever  possible  inspection  should  provide  for  such  accu- 
racy of  parts  as  to  make  it  unnecessary  for  the  assembler  to  do  any 
filing  or  fitting.    In  every  case,  however,  where  such  fitting,  grinding, 
or  drilling  has  to  be  done  by  the  assembler,  the  necessary  machinery 
for  doing  the  work  must  be  placed  as  conveniently  as  possible. 

d.  Every  possible  facility  should  be  provided  for  the  quick 
handling  of  the  work.    In  the  case  of  heavy  parts,  there  should  be  a 
thorough  system  of  hoists  and  cranes.    The  stipulations  outlined 
under  the  heading  of  "Handling  of  Work"  will  apply  here. 

A  very  careful  consideration  of  all  of  these  problems  and  a 
serious  attempt  to  solve  them  scientifically  will  bring  surprising 
results. 

I  have  often  noted  very  large  savings  in  time  in  assembling  opera- 
tions, which  apparently  were  performed  by  workmen  at  a  very  high 
rate  of  speed,  working  under  the  piece-work  system.  A  few  examples 


104  PROFIT-MAKING   MANAGEMENT 

of  the  benefits  of  the  system  advocated,  taken  from  my  own  experi- 
ence, may  prove  of  interest  at  this  point. 

A  few  months  ago,  I  witnessed  an  assembling  job,  the  work  of 
which  was  done  according  to  methods  which  had  been  developed 
under  a  careful  study  along  the  lines  advocated.  The  piece-work 
price  on  the  assembling  work  had  formerly  been  $2.85  per  piece.  The 
application  of  these  newer  methods  made  it  possible  for  the  workman 
to  do  the  entire  assembling  job  in  16  minutes,  and  this,  too,  at  a  pace 
which  it  is  perfectly  possible  for  him  to  main  tain  during  his  entire 
working  period. 

Some  four  years  ago,  I  made  comprehensive  tests  in  a  very  large 
establishment  on  assembling  work  requiring  a  particular  degree  of 
expertness  and  dexterity.  Inasmuch  as  it  was  impossible  to  secure 
one  of  the  trained  workmen  (numbering  in  all  over  150)  who  would 
give  his  very  best  efforts  to  any  job  that  might  be  set  before  him,  I 
took  a  man  who  was  an  ordinary  truckman,  who  had  never  been  a 
mechanic  in  any  sense  of  the  word,  and  trained  him  for  a  period  of 
five  weeks  before  we  started  him  to  doing  the  testing.  We  naturally 
selected  a  man  who  was  particularly  bright  and  capable.  I  do,  how- 
ever, want  to  emphasize  the  point  that  this  particular  individual  was 
not  a  trained  mechanic  and  secured  what  skill  he  possessed  only  dur- 
ing the  five  weeks  training  mentioned  above. 

Allowing  that  each  workman  should  earn  on  the  average  of  $3.00 
a  day,  we  found  that  there  were  286  jobs  that  averaged  167  per  cent, 
too  high.  In  other  words,  for  every  job  that  formerly  cost  $1.00  on 
piece  work,  we  found  the  proper  price  to  be  about  38  cents.  Even 
then  the  limit  had  not  been  reached,  because  of  the  fact  that  the  man 
who  was  doing  the  work  could  not  be  termed  the  highest  grade  of 
mechanic.  We  found,  however,  that  after  six  months  had  elapsed,  he 
could  easily  earn  $4.00  a  day  at  the  prices  on  the  new  basis,  whereas 
his  former  earning  had  been  $3.00  a  day.  Further  investigation 
showed  that  in  this  establishment,  where  4,700  men  were  employed, 
there  were  a  number  of  departments  where  the  work  was  quite  sim- 


STANDARD   TIMES   FOR   ASSEMBLING  105 

ilar  but  where  the  piece-work  prices  were  all  out  of  proportion,  those 
in  one  department  being  greatly  in  excess  of  the  prices  in  other  de- 
partments doing  similar  work,  this  being  due  to  the  relative  efficiency 
or  inefficiency  of  the  foremen  in  setting  prices.  We  found  upon  the 
average  that  this  disproportion  amounted  to  over  23  per  cent.  The 
tests  mentioned  above  were  performed  in  one  of  the  departments 
which  was  considered  the  most  efficient.  In  another  department — a 
large  polishing  room  containing  123  men — I  found  another  field  for 
work  of  the  character  advocated.  These  polishers  were  supposed  to 
be  very  high  grade,  their  average  earning  capacity  being  $4.00  a  day. 
The  grinding,  polishing  and  buffing  included  work  upon  brass,  bronze, 
copper,  sheet  steel,  and  cast  iron.  After  the  work  of  investigation 
had  been  under  way  but  a  short  time,  a  strike  occurred.  All  of  the 
old  polishers  left  in  a  body.  We  secured  a  group  of  12  expert  pol- 
ishers from  other  sections  of  the  country,  and  then,  by  offering  a 
high  day-work  wage  rate,  we  employed  62  men  from  the  adjoining 
city.  It  is  important  to  note  that  these  last  were  men  who  had  never 
been  "up  against"  a  polishing  or  buffing  wheel,  and  knew  absolutely 
nothing  about  the  trade.  Some  were  clerks  from  the  company's  office 
and  others  were  grocery  and  dry-goods  clerks  attracted  by  the  high 
wage  rate.  Care  was  exercised  to  see  that  they  were  strong,  healthy 
and  intelligent.  Each  experienced  polisher  was  placed  in  complete 
charge  of  a  group  of  five  of  these  "green"  men.  This  experienced 
polisher  was  under  no  circumstances  allowed  to  do  the  work  himself, 
other  than  to  show  these  men  how  to  do  the  work  and  to  train  them  in 
every  possible  trick  of  the  trade.  Extra  rewards  were  given  to  these 
experts  to  get  proper  results  from  the  men.  In  addition  to  this,  the 
foreman  and  assistant  foreman  of  the  department,  together  with  the 
writer,  were  hi  constant  attendance.  Unfortunately,  my  investigation 
of  the  elements  of  this  work  had  been  so  handicapped  by  the  extra 
work  incidental  to  the  strike  that  it  was  impossible  to  analyze  each 
and  every  job  in  the  department.  The  analyses  already  made,  how- 
ever, showed  that  a  reduction  of  40  per  cent  could  easily  be  made 


106  PROFIT-MAKING    MANAGEMENT 

and  still  provide  the  men  with  a  large  enough  price  to  enable  them 
to  earn  a  good  wage.  It  was  our  original  intention  to  place  the  new 
men  upon  a  day-work  system  of  pay  for  a  period  of  about  eight  weeks, 
the  management  presuming  that  very  slow  progress  would  be  made 
for  this  period  at  the  very  least,  many  of  the  officers  indeed  claiming 
that  proper  results  could  never  be  accomplished. 

The  analyses  of  operations  and  the  method  of  training  was  pur- 
sued so  vigorously,  however,  that  we  found  it  possible  to  put  the 
entire  body  of  men  upon  piece  work  at  the  end  of  three  weeks  and 
a  half.  The  new  piece-work  prices  (40  per  cent  lower  than  the  old 
ones)  were  given  to  these  "green"  men  with  the  assurance  that  there 
would  be  no  reductions  made  and  that  the  firm  would  be  glad  to  have 
them  make  all  the  money  they  could  during  that  period. 

The  management  was  careful  to  see  that  the  former  rigid  system 
of  inspection  was  still  adhered  to  hi  the  case  of  these  new  men.  It  is 
a  matter  of  record  that  at  the  end  of  a  period  of  ten  weeks  the  aver- 
age earnings  of  the  men  of  the  department  exceeded  $5.50  per  day. 
The  work  increased  so  materially  that  at  the  end  of  six  months  the 
actual  records  showed  savings  in  the  pay  roll  in  this  department 
amounting  to  over  $55,000  per  year. 

Had  there  been  time  to  make  a  closer  time  study,  it  would  have 
been  possible  for  the  firm  to  save  even  a  larger  amount  of  money  with 
the  additional  assurance  to  the  workman  that  he  would  still  have  been 
able  to  earn  a  large  wage. 

These  few  examples  will  serve  to  illustrate  the  splendid  possibili- 
ties of  the  methods  and  systems  advocated. 

I  shall  take  up  later  the  question  of  the  system  of  pay  to  be  used 
in  case  of  a  shop  adopting  systems  described  in  this  book.  It  is 
sufficient  to  say  at  this  point  that  I  regard  it  as  absolutely  essential 
that  a  workman  receive  a  very  considerabk  increase  in  his  daily  wage  for 
accomplishing  the  very  desirable  results  which  can  be  secured.  My 
object  hi  mentioning  this  just  now  is  to  emphasize  the  fact  that  even 
with  the  best  analyses  a  workman  will  become  so  skilful  in  time  on  an 


STANDARD   TIMES   FOR   ASSEMBLING  107 

assembling  job  as  to  exceed  to  quite  a  large  degree  the  calculated 
records,  and  consequently,  in  order  to  secure  this  extra  output,  the 
possibility  of  which  lies  hidden  within  the  workman's  skill,  it  is 
necessary  to  offer  an  additional  premium. 

FOREMEN'S  CO-OPERATION. 

It  has  been  remarked  to  me  more  than  once  that  the  most  difficult 
of  all  the  problems  connected  with  the  introduction  of  such  systems 
as  those  advocated  is  that  of  securing  the  foremen's  co-operation.  It 
is  undoubtedly  true  that  unless  the  hearty  co-operation  of  the  men 
operating  the  departments  be  secured,  the  system  is  almost  certain 
to  fail.  It  is  safe  to  say  that  it  will  be  almost  impossible  to  introduce 
these  plans  in  any  comprehensive  way  with  a  shop  organized  in  the 
ordinary  manner.  It  is  for  this  reason  that  I  venture  continually  to 
bring  forth  the  effectiveness  and,  indeed,  the  necessity  for  the  Com- 
mittees. In  securing  the  foremen's  co-operation  to  these  plans,  tact 
must  be  used.  Unless  the  matter  is  handled  delicately,  every  one  of 
them  will  feel  that  his  department  is  going  to  be  "shown  up,"  and 
the  new  record  will  be  compared  against  his  own  record  to  his  own 
disadvantage.  Naturally,  therefore,  this  consideration  will  lead  him 
to  covertly  oppose  the  introduction  and  success  of  the  methods  at 
every  point.  When,  however,  these  matters  are  considered  in  their 
presence  with  the  Tool  Room  Committee  and  the  tester,  together  with 
the  tabulation,  they  are  placed  in  a  position  where  they  must  wheel  in 
line  and  give  their  support  to  the  system. 

By  calling  all  of  them  constantly  into  consultation  with  the  Com- 
mittee, they  are  placed  in  a  position  where  they  cannot  defend  any 
unfair  attitude  toward  these  methods.  Give  them  to  understand  that 
if  they  have  anything  to  say  in  opposition  to  the  plans  the  Committee 
room  is  the  place  to  say  them,  and  under  no  circumstances  tolerate 
a  word  of  criticism  outside  of  the  Committee  room.  If  they  are  made 
to  see  that  the  results  are  obtained  through  new  methods  entirely,  and 
that  they  are  not  to  be  criticized  nor  held  responsible  for  the  results 


108  PROFIT-MAKING    MANAGEMENT 

formerly  obtained  under  the  old  conditions,  they  will  soon  lend  their 
enthusiastic  support  to  these  plans.  Let  me  again  assure  any  one 
considering  the  introduction  of  these  plans  that  this  support  is  abso- 
lutely necessary. 

I  have  always  'found  that  if  this  important  question  is  handled 
along  the  lines  indicated,  and,  in  addition  to  this,  the  foremen  are 
given  to  understand  the  success  of  the  system  would  mean  addition 
to  their  remuneration,  their  hearty  co-operation  will  be  secured. 


CHAPTER  XI. 
STIMULATING  PRODUCTION  BY  THE  WAGE  SYSTEM. 

TN  the  preceding  chapters  methods  of  determining  with  accuracy 
*  the  shortest  possible  time  hi  which  any  job  can  be  done  were 
fully  discussed.  There  I  dealt  with  the  latest  tables  showing  the  best 
possible  cutting  speeds  on  lathes,  planers,  and  drill  presses,  and  also 
described  methods  by  which  the  shortest  possible  time  on  intricate 
assembling  jobs  can  be  determined.  Naturally,  the  determination  of 
this  "shortest  time" — this  fixing  of  the  "standard  tune" — will  prove 
of  great  assistance  in  the  collection  of  prune  labor  cost  data  on  any  and 
all  jobs  of  work. 

Before  giving  consideration  to  systems  of  cost-keeping  or  to  the 
stock-keeping  and  stock-tracing  systems  which  are  interlocked  there- 
with, it  is  important  that  we  briefly  consider  the  question  of  the  wage 
system  under  which  the  men  must  work,  and  which  to  them  is  the 
all  important  feature  of  their  shop  life. 

We  manufacturers  must  keep  in  mind  just  what  actual  shop  life 
and  the  wage  system  mean  to  a  workman.  We,  who  have  crawled 
up  the  scale,  now  look  upon  a  broader  horizon  of  opportunity.  We 
are  not  surrounded  by  those  inexorable  conditions  which  to  a  large 
extent  absolutely  regulate  the  life  of  the  average  workman.  We  are 
not  subject  to  the  whim  of  a  job  boss  or  assistant  foreman,  who  holds 
his  place  perchance  through  favoritism  or  relationship  to  someone  in 
power,  and  who  looks  with  frowning  mien  upon  any  improvement 
which  might  be  suggested  and  for  which  he  may  not  get  the  credit; 
whose  control  over  five-twelfths  of  daily  existence  is  well-nigh  abso- 
lute; who  can  make  the  daily  work  easy  or  hard,  the  daily  earnings 
for  the  all  important  livelihood  large  or  small,  by  apportioning  the 

109 


110  PROFIT-MAKING   MANAGEMENT 

work  unfairly.  We  are  not  compelled  to  work  under  a  system  of  pay 
that  provides  no  especial  recompense  for  extra  effort  and  extraordi- 
nary output,  but  which  on  the  other  hand  often  rewards  (?)  extra 
thought  and  extra  skill  and  effort  by  a  cut  in  the  rate  or  "  price,"  which 
leaves  one  working,  perhaps,  20  per-cent  harder  than  a  few  days 
before  with  a  daily  return  hi  wages  no  larger  than  formerly — our 
job  boss  or  foreman  adding  to  the  "pleasure  of  the  incident"  by 
proudly  showing  how  he  "  cut  that  price  20  per  cent,  saved  the  com- 
pany a  large  sum  of  money,  and  still  'gets  the  output.'  " 

Much  has  been  written  upon  the  subject  of  systems  of  pay  and 
many  broadsides  have  been  fired  at  the  old  system  of  piece  work, 
coupled  as  it  so  often  is  with  the  practice  of  cutting  rates  when  the 
men  begin  to  earn  large  wages.  But  it  is  far  from  being  blown  out  of 
existence,  for  today  the  majority  of  factory  managers  still  adhere 
to  these  methods.  Understand  me,  I  do  not  criticize  the  piece-work 
system  per  se,  but  I  do  strongly  condemn,  as  unfair  and  uneconomical, 
the  habit  of  cutting  of  rates  when  wages  become  high  which  almost 
invariably  accompanies  the  system.  In  fact,  I  have  found  the  same 
tendency  to  exist  hi  the  case  of  the  premium  and  other  systems  of  pay, 
in  some  cases.  The  mischief  is  very  largely  caused  by  the  practice 
of  setting  "original  prices"  or  "original  times,"  not  based  upon  data 
scientifically  determined,  but  upon  "best  previous  records,"  an  ordi- 
nary "try  out"  or,  worst  of  all,  the  foreman's  estimate.  It  is  be- 
cause of  the  importance  of  the  system  of  pay  and  because  of  the  ineffi- 
ciency of  the  ordinary  methods  that  I  have  tried,  in  the  preceding 
paper,  to  lay  down  some  principles  or  rules  that  may  be  a  guide  in 
securing  proper  results  and  in  giving  us  a  secure  and  accurate  foun- 
dation upon  which  to  build  our  structure  of  proper  factory  manage- 
ment. 

We  must  ever  keep  in  mind  that  recompense  to  the  workman  is 
only  one  part  of  our  total  cost.  A  largely  increased  production  per 
square  foot  of  floor  area  means  lower  cost  through  the  decreased 
proportion  of  overhead  or  indirect  cost  per  piece.  Further,  it  means 


WAGE   SYSTEMS  111 

a  much  quicker  movement  of  stock  and  thus  a  release  of  working 
capital  through  reduction  of  investment  in  stock.  It  means  better 
satisfaction  to  selling  department  and  customer  through  quicker  de- 
liveries, and  almost  invariably  an  increase  hi  sales  with  a  heavy 
decrease  hi  cost  of  selling  per  article.  The  average  factory  manager 
will  term  this  far-fetched;  but  any  man  who  has  reorganized  a  com- 
pletely run-down  concern,  and  built  up  the  manufacturing,  selling, 
and  financial  ends  of  a  business,  knows  that  there  is  nothing  so  vitally 
important  to  the  success  of  the  business,  hi  every  direction,  as  the 
quickening  of  shop  production  and  the  possibility  thus  secured  of 
making  a  quicker  turn-over  of  working  capital  invested.  The  average 
factory  manager  gives  little  thought  to  this,  but  the  financial  officers 
and  backers  spend  many  worried  hours  trying  to  make  both  ends  meet 
and  wondering  "where  all  the  money  goes." 

THE  WAGE  PROBLEM  IN  INTRODUCING  STANDARD  TIMES. 

We  may  be  sure  that,  having  collected  all  of  our  data  relative  to 
standard  times,  we  still  have  before  us  the  problem  how  to  introduce 
these — how  to  persuade  the  workmen  to  work  to  them,  or  in  shop 
phraseology,  to  "stand  for  them."  For  you  may  be  certain  that  if 
the  work  of  determining  these  times  is  done  accurately  and  thoroughly, 
the  figures  obtained  will  be  so  far  below  the  results  actually  being 
secured  in  existing  shop  practice,  that  the  workmen  will,  in  all  honesty, 
refuse  to  believe  that  it  is  possible  to  attain  such  rates  of  production; 
and  indeed,  we  too  must  keep  hi  mind  that  the  attainment  of  these 
standard  times  does  not  depend  wholly  upon  the  workmen,  but  very 
largely  depends  upon  the  efficiency  of  the  factory  management  itself 
in  many  directions,  such  as  supplying  plenty  of  tools  of  standard 
shapes  and  hardness,  proper  machine  tools  and  fixtures,  and  stock 
properly  placed,  as  well  as  a  method  of  instructions  and  demonstra- 
tions how  the  work  should  and  can  be  done. 

It  is  perfectly  obvious  that  not  every  workman  can  possibly  attain 
for  some  time  the  rate  of  speed  necessary  to  do  the  work  within 


112  PROFIT-MAKING    MANAGEMENT 

the  set  time  limits.  It  is  equally  clear  that  it  is  immensely  to  the 
benefit  of  the  manufacturer  for  him  to  get  the  working  time  down  to 
the  points  determined  upon.  A  flat  piece  rate  based  upon  these  times 
is  manifestly  unfair,  and  an  attempt  to  introduce  such  rates  would 
probably  lead  to  immediate  trouble  with  the  men.  I  am  strongly 
opposed  to  any  plan  that  does  not  provide  some  form  of  extra  reward 
to  the  man  for  attaining  the  standard  time,  this  form  of  reward  or 
bonus  to  be  assured  to  him  with  the  guarantee  that  no  reductions  will 
be  made  unless  methods,  process,  or  tools  be  changed. 

The  method  of  pay  and  character  of  the  reward  will  depend  upon 
the  character  of  the  business  and  the  method  of  pay  already  in  use. 
I  have  never  favored  the  forcing  of  any  preconceived  plan  of  any 
character  upon  a  factory  organization  or  system,  if  it  carries  with  it 
the  necessity  for  ripping  up  existing  methods  and  plans  that  have  be- 
come a  part  of  the  factory's  very  daily  existence.  The  old  method, 
the  old  systems,  possess  a  momentum  that  cannot  be  overcome.  So, 
repeatedly,  have  I  seen  the  modern  systematizer  enter  the  shop  organ- 
ization, upset  the  existing  methods,  put  in  his  own  pretty  theories, 
only  to  find,  upon  returning  six  or  nine  months  later,  that  the  mo- 
mentum of  the  old  methods,  devised  by  men  who  learned  the  shop's 
necessities  through  long  and  bitter  experience,  had  been  too  much  for 
his  plans  and  that  everything  he  had  done  had  been,  in  some  inex- 
plicable manner,  swallowed  up  and  absorbed  by  the  rolling  old  system. 
'Tis  only  the  theorizer,  the  man  who  has  not  "been  through  the  mill" 
and  who  knows  not  the  innermost  recesses  of  the  shop  processes  and 
cannot  read  the  hidden  thoughts  and  feelings  of  the  members  of  a 
shop  organization,  who  rashly  promises  to  "  put  in  a  system  that  will 
revolutionize  the  shop  and  bring  up  its  efficiency." 

Rather  study  carefully  the  character  of  the  work,  the  ability  of 
the  foremen  and  workmen,  and  the  systems  already  in  use,  and  then 
begin  to  adapt  the  new  methods  to  the  old — apparently  deduce  the 
new  methods  from  the  old — and  you  will  have  the  intelligent  support 
of  the  organization.  And  that  support  that  will  mean  progression  to 


-  \ 

u?J!VERS!TV    I 
J 

^ 


WAGE   SYSTEMS  113 

newer  fields  of  thought  and  activities,  and  not  retrogression  to  the 
older  methods. 

These  remarks,  fundamental  in  their  importance,  apply  with  par- 
ticular force  to  the  determination  of  the  wage  system  to  be  adopted. 
The  principle  of  extra  bonus  or  the  attainment  of  standard  time  can 
be  easily  applied  to  almost  any  system  of  pay.  Where  it  cannot  be 
applied  directly,  the  transition  to  a  proper  system  is  usually  not 
difficult. 

SYSTEMS  OF  PAY. 

The  most  prominent  systems  of  pay  in  the  United  States  are  dis- 
cussed below.  In  England  there  are  many  different  plans,  but  these 
cited  herein  represent  the  most  prominent  in  use  today. 

Day-Work  Plan.  —  This  plan,  usually  decidedly  inefficient  unless 
under  special  conditions,  can  be  easily  changed  to  a  most  efficient  one 
by  applying  the  bonus  idea  advanced  by  Mr.  Gantt. 

Piece  Work.  —  By  this  the  workman  receives  a  certain  amount  of 
pay  per  piece.  A  very  mischievous  plan  if  it  be  accompanied  by  the 
continual  cutting  of  rates.  It  cannot  be  considered  efficient  when  the 
rates  are  established  according  to  methods  usually  practised. 

Premium  Plan.  —  An  efficient  plan  on  many  classes  of  work.  The 
determination  of  standard  times  should,  however,  be  made  carefully. 
If  the  rates  are  determined  by  other  methods  the  plan  will  eventually 
fail. 

The  Differential  Plan.—  Developed  by  Mr.  F.  W.  Taylor,  of  Phila- 
delphia; the  piece  price  varies  according  to  the  rate  of  production. 
The  greater  the  number  of  pieces  turned  out  hi  a  given  time,  the 
higher  the  piece  price.  This  can  be  applied  when  the  "  intensity  or 
rate  of  production"  must  be  high  hi  order  to  get  the  utmost  out  of 
very  costly  machinery,  tools,  etc. 

The  Bonus  Plan.  —  Explained  in  detail  by  Mr.  Gantt  in  his  valuable 
paper  read  before  the  A.  S.  M.  E.  in  December,  1901.  Distinctly 
a  system  of  task  work  combined  with  the  use  of  instruction  cards  for 


114  PROFIT-MAKING    MANAGEMENT 

the  workmen  and  a  bonus  for  accomplishing  the  task  within  the  time 
set  for  it. 

This  bonus  system  of  pay  has  always  appealed  to  me  as  the  most 
easily  understood,  the  easiest  to  introduce  with  little  opposition,  and 
the  most  effective  of  all  systems  yet  produced.  It  is  adaptable  in  some 
form  to  almost  any  other  system  of  pay  that  may  be  already  in  exist- 
ence in  the  shop.  It  is  the  easiest  to  introduce  in  case  the  men  are 
working  upon  the  day-work  basis.  Nor  is  it  difficult  to  persuade  the 
workmen  to  abandon  piece  work  for  it  hi  case  the  reward  is  made 
sufficient.  I  have  been  introducing  it  into  works  under  my  control 
with  marked  success. 

It  is  of  interest  to  note  here,  however,  that  even  the  closest  analysis 
and  study  of  the  possibilities  of  assembling  operation  of  great  intri- 
cacy, such  as  the  assembling  of  the  counting  mechanism  of  high- 
grade  adding  machines  and  cash  registers,  failed  to  give  a  positive 
indication  of  the  possibilities  of  output  in  the  case  of  a  highly  expert 
workman.  The  time  of  actual  tests  of  the  intricate  assembling  when 
made  by  the  special  tester  fell  far  short  of  the  time  that  could  be 
easily  maintained  by  the  workman  who,  through  years  of  repetitive 
processes,  had  gained  marvelous  skill.  The  study  of  his  movements 
by  a  stop-watch  expert  would  often  show  but  little  as  regards  the 
possibilities  of  increasing  the  speed  of  the  essential  operation,  though 
expert  observation  will  probably  show  that  much  can  be  gained  by 
arranging  the  stock  and  tools  properly  and  providing  ample  quanti- 
ties of  stock  properly  inspected  for  quality.  But  the  skilled  assem- 
bler can  and  will  deceive  anyone  not  of  the  highest  order  of  expertness 
concerning  his  possible  rate  of  production,  particularly  when  he  has 
worked  for  years  in  the  assembling  of  small  parts  of  great  intricacy 
and  where  great  accuracy  is  necessary.  Therefore,  I  applied  a  simple 
plan  of  offering  the  men  an  additional  bonus  for  every  half-hour  they 
gained,  in  the  form  of  an  increase  (carefully  proportioned  according 
to  the  length  of  the  job)  to  their  half-hourly  wage  rate. 

I  am  distinctly  in  favor  of  the  bonus  plan  of  pay  when  combined 


WAGE   SYSTEMS  115 

with  methods  that  determine  accurately  the  shortest  time  in  which  a 
job  can  be  finished.  It  should  include  a  bonus  plan  for  the  job  bosses 
and  the  foremen  by  which  they  secure  bonuses  hi  case  all  the  men 
under  them  earn  bonuses.  This  will  result  in  the  foremen  immedi- 
ately giving  their  close  attention  to  the  inefficient  workman  for  his 
proper  and  speedy  training  or  his  discharge. 


CHAPTER  XII 

STOCK  AND  COST  SYSTEMS  AS  A  FACTOR  IN  PROFIT- 
MAKING. 

TV/TTJCH  has  already  been  written  of  stock  and  cost  systems,  the 
•*•*•••  subject  having  been  thoroughly  covered  by  a  number  of  able 
writers  and  managers.  I  will  not  attempt  to  go  into  detail  and 
describe  any  particular  cost  system,  for  that  has  already  been  well 
done.  Besides,  as  already  stated,  each  business  presents  its  individ- 
ual problems  so  that  it  is  better  to  consider  the  adaptation  of  certain 
fundamental  principles  to  existing  conditions  rather  than  to  describe 
a  fully  developed  system  with  the  thought  that  it  can  be  transplanted 
in  its  entirety  to  any  other  factory. 

In  fact,  I  shall  not  attempt  within  the  confines  of  this  chapter  to 
discuss  the  theory  of  cost  keeping,  nor  shall  I  deal  with  the  problems 
of  distribution  of  overhead  or  indirect  charges.  Rather  shall  I  confine 
my  attention  to  a  description  of  a  very  simple  and  yet  effective  system 
of  prime-cost  keeping  combined  with  the  important  stock-keeping  and 
stock-tracing  systems,  which  hi  actual  practical  use  has  proven  of 
great  value  in  a  number  of  concerns  when  properly  adapted  to  exist- 
ing conditions. 

To  my  mind  a  cost  system  should  primarily  be  so  devised  as  to 
give  the  manufacturer  an  accurate  knowledge  of  his  most  costly  and 
expensive  operations,  so  that  he  may  know  unerringly  these  "high 
spots"  and  attack  them  vigorously.  With  this  knowledge  he  can  then 
devise  various  ways  and  methods  of  reducing  costs.  Without  it  he 
is  well-nigh  powerless.  His  stock  system  should  enable  him  to  keep 
down  his  investment  to  a  minimum.  His  stock-tracing  system  should 
prove  a  most  effective  means  of  getting  his  stock  through  his  factory 

116 


STOCK   AND   COST   SYSTEMS  117 

rapidly  and  without  delays.  In  other  words,  the  practical  value  of 
these  systems  as  thoroughly  effective  methods  with  which  to  locate 
the  "inefficient  spots/'  and  through  which  to  attack  those  operations 
or  methods  which  are  excessively  costly,  outweighs  the  importance 
of  the  theoretical  securing  of  costs  simply  hi  order  to  determine  the 
selling  price.  The  cost  system  should  provide  a  club  with  which  to 
beat  down  costs — the  stock-tracing  system  another  club  to  drive  the 
factory  rapidly  and  economically.  Therefore,  the  stock  system,  stock- 
tracing  system,  and  cost  systems  are  so  interrelated  as  to  make  it  im- 
possible to  consider  one  without  the  other. 

KEEPING  OF  RAW  STOCK. 

The  stock-invoice  card  illustrated  on  the  next  page  will  show  clearly 
the  nature  of  the  data  required  to  keep  such  records  properly.  The 
problems  involved  are: — 

1. — The  keeping  on  hand  of  sufficient  raw  stock. 

2. — The  placing  in  the  factory  of  proper  amounts  of  stock  for 
manufacturing  purposes. 

3. — The  keeping  on  hand  of  proper  amounts  of  finished  parts  for 
assembling. 

In  cases  where  work  is  ordered  wholly  on  special  contracts,  and 
special  material  ordered  from  outside  manufacturers,  the  same  simple 
system  can  be  used  with  modifications  and  will  prove  of  equal,  if 
indeed  not  greater,  importance;  for  in  such  cases  some  method  by 
which  special  raw  stock  from  outside  manufacturers  can  be  brought 
to  the  shop  on  time  is  absolutely  necessary. 

Necessarily  the  first  form  is  the  Requisition  for  Stock.  This  is  so 
uniformly  used  as  not  to  need  illustration.  It  forms,  however,  a  very 
important  and  necessary  link  to  the  chain. 

The  next  important  form  is  the  Stock-Invoice  Card.  This  can 
be  placed  at  each  stock  bin  or  filed  in  the  factory  office. 

The  most  important  point  to  note  is  the  "order  limit,"  or  the  limit 
at  which  new  stock  must  be  ordered.  If  it  be  raw  stock  then  this 


118 


PROFIT-MAKING    MANAGEMENT 


limit  must  be  determined  by  giving  consideration  to  the  amount  of 
finished  stock  required  in  finished-stock  bins,  the  length  of  time 
required  to  get  the  stock  through  the  factory,  and  the  length  of  time 
required  to  get  the  stock  from  the  manufacturers.  The  "  rush  limit" 
indicates  a  dangerous  condition  of  affairs  that  must  be  remedied  by 
using  extra  efforts.  In  the  case  of  raw  stock  the  purchasing  agent 
must  be  notified  immediately  and  kept  after  continually. 


Name  and  Specificai 

STOCK  INVOICE  CARD                             Bin  No. 
ions  

Am'tUse 
Where  U 

d  per  Mo  ( 

Drder  Limi 
Rush  Limi 

t  

sed  

t 

Date 

Ordered 

Received 

Delivered 
to  Factory 

Order 
Number 

Inventory 

Check 
No. 

In  order  to  have  this  simple  system  work  properly  great  care 
must  be  used  in  making  all  entries  promptly  and  properly.  It  will 
be  noted  that  this  very  simple  plan  provides  a  perpetual  inventory  of 
great  value  in  many  ways.  While  it  does  not  provide  for  the  com- 
bining of  factory  accounts  with  the  general  accounting,  still  it  does 
provide  a  very  simple,  inexpensive,  and  in  most  cases  a  sufficiently 
accurate  method  of  keeping  accounts  and  values.  Reports  of  raw 


STOCK   AND   COST   SYSTEMS  119 

stock  reaching  these  limits  must  be  made  each  night  to  the  purchasing 
agent,  a  Special  Rush  List  giving  those  that  have  reached  the  rush 
limit  point. 

In  the  case  of  the  finished  stock  even  greater  care  and  vigor  must 
be  used.  The  entries  having  been  properly  made,  a  list  giving  the 
amounts  of  those  items  of  stock  which  have  reached  the  order  limit 
is  sent  to  the  stock  tracer,  who  can  ascertain  whether  additional  stock 
should  be  ordered  or  stock  already  ordered  hurried  in  its  course  of 
manufacture.  A  separate  rush  list  showing  the  amounts  of  items  of 
stock  which  have  fallen  to  and  below  the  rush  limit  should  also  be 
given  to  the  stock  tracer  for  his  immediate  and  special  attention.  In 
many  cases  these  lists  should  likewise  be  given  to  the  departmental 
foremen,  as  they  are  thereby  provided  with  the  best  possible  means 
of  knowing  what  work  to  rush. 

The  system  as  described  is  particularly  fitted  for  that  class  of 
manufacturing  in  which  the  work  is  standard  and  many  parts  can  be 
carried  in  stock. 

In  cases  where  the  work  is  upon  special  contracts  and  the  work 
not  standard,  careful  consideration  must  be  given  to  the  time  within 
which  each  department  must  do  its  share  of  work  and  turn  it  over 
to  the  next  department,  calculating  of  course  from  the  given  delivery 
date  of  the  work.  This  time  should  be  entered  upon  the  Special  Stock 
Tracing  and  Cost  Sheet  which  will  be  illustrated  later. 

All  cost  entries  are  made  from  the  workman's  time  ticket.  This 
ticket  needs  no  description.  It  differs  in  each  factory  and  each  system 
of  pay.  It,  of  course,  should  contain : — 

1. — Name  of  the  department. 

2. — Name  or  number  of  the  piece. 

3. — The  order  number  and  box  number. 

4. — Character  of  the  operation. 

5. — A  full  description  of  the  amount  of  stock  received  and  finished. 

6. — The  price  or  rate,  and  total  wage. 

7. — The  time  started  and  time  finished. 

8. — Name  of  workman,  foreman,  and  inspector. 


120 


PROFIT-MAKING    MANAGEMENT 


8 

13  6 
8* 


11 


3 


14 

$? 


STOCK   AND   COST   SYSTEMS  121 

STORAGE  PLATFORMS. 

Wherever  possible  it  is  advisable  to  establish  storage  platforms 
in  each  department.  These  should  be  of  the  height  of  the  moving 
trucks  so  as  to  facilitate  the  loading  and  unloading.  Each  workman 
should  have  beside  him  only  the  job  upon  which  he  is  working,  and 
the  next  job  upon  which  he  is  to  start  (with  all  necessary  tools, 
gauges,  clamps,  fixtures,  etc.).  All  other  stock  should  be  placed 
upon  the  platforms.  The  advantages  are  many: — 

1. — The  foreman  and  the  shop  management  are  provided  with  a 
very  close  idea  of  each  department's  operating  condition.  An  excess 
of  stock  shows  an  unbalanced  shop  condition.  A  shortage  may  prove 
a  like  condition  in  another  department,  and  a  too  large  capacity  in 
the  one  under  observation. 

2. — A  foreman  can  thus  easily  apportion  the  work  among  his 
men  so  that  no  delays  need  be  encountered.  In  addition  to  this  he  can 
easily  collect  the  needed  tools,  gauges,  fixtures,  and  clamps  for  the 
next  job  for  each  man — exceedingly  important  features. 

3. — Should  the  foreman  note  that  he  is  running  short  of  any 
particular  stock  adapted  to  any  of  his  machines,  he  can  notify  the 
stock  tracer  who  can  easily  afford  him  relief  by  rushing  other  depart- 
ments. This  prevents  the  foreman  from  running  around  the  shop 
needlessly. 

4. — The  stock-tracing  or  routing  system  is  greatly  simplified. 

5. — The  taking  of  inventories  is  greatly  simplified. 

THE  STOCK  TRACING  AND  COST  SHEETS. 

All  entries  are  made  upon  the  Stock  Tracing  and  Cost  Sheets  by 
the  cost  clerks.  The  rapidity  with  which  these  entries  can  be  made 
by  rapid  clerks  is  remarkable.  In  one  factory  operating  over  four 
thousand  men,  all  entries  regarding  immense  quantities  of  stock  were 
made  upon  these  sheets  by  these  clerks.  A  careful  examination  of 
this  stock  tracing  and  cost  sheet  shows  that  herein,  in  simple  form,  is 


122  PROFIT-MAKING    MANAGEMENT 

contained  a  full  history  of  each  lot  of  stock  in  such  form  as  to  admit 
of  many  uses. 

1.— The  stock  tracer,  notified  by  his  date  sheets  from  the  stock 
clerk  of  any  stock  which  is  running  low,  can  quickly  determine  those 
departments  in  which  is  located  that  stock  which  may  be  further 
along  hi  course  of  manufacture.  He  can  readily  force  these  foremen 
to  produce  the  stock  to  prevent  delays. 

2. — Delays  in  any  department  are  clearly  indicated. 

3. — The  actual  time  consumed  and  the  labor  cost  on  each  operation 
are  closely  indicated.  There  is  provided  an  analysis  that  will  prove  of 
great  value  in  the  hands  of  one  who  will  systematically  hunt  for  the 
most  costly  points  in  production,  with  the  object  of  devising  tools  or 
methods  by  which  cost  reductions  can  be  made.  The  value  of  this 
record  hi  inventories  is  apparent. 

4. — Each  workman  is  clearly  linked  up  with  his  operation.  The 
columns  showing  "Loss"  will  provide  an  index  to  the  efficient  men. 

5. — The  data  relative  to  weight  and  value  of  raw  stock  may  of 
course,  be  adapted  to  conditions.  Whatever  the  plan  pursued  it  may 
be  very  simple.  We  are  thus  easily  provided  with  a  prime-cost  record 
of  great  value  hi  devising  cost  reduction,  and  in  the  making  of  it  we 
are  provided  with  a  full  stock-tracing  system. 

As  before  stated,  I  shall  not  attempt  to  discuss  the  question  of  the 
overhead  or  indirect  charge  as  this  has  already  been  dealt  with  fully, 
my  object  being  solely  to  present  a  simple  and  adaptable  system 
which  will  include  the  solution  to  all  of  the  practical  problems  to  be 
met  with  in  manufacturing. 

By  using  properly  the  data  already  upon  the  tune  ticket  or  stock 
tracing  and  cost  sheet,  supplementary  reports  of  value  can  be  made 
up  such  as: — 

1. — The  individual  workman's  record,  showing  each  man's  record 
on  each  job. 

2. — The  job  record,  showing  the  job  time  and  cost  record  for 
each  workman. 


STOCK   AND   COST   SYSTEMS  123 

3. — The  departmental  efficiency  record,  in  which  output,  number 

of  employees,  pay  roll,  and  costs  are  compared. 
4. — General  factory  output  and  efficiency  record,  showing  com- 
parison of  output,  hours  work,  pay  rolls,  and  costs  com- 
paring one  period  (either  months  or  years)  with  one  another. 
A  factory  thus  equipped  with  a  cost  system  that  will  enable  the 
manufacturer  to  determine  the  proper  point  of  high  cost  to  attack, 
with  a  system  of  determining  standard  times,  a  method  of  stock  loca- 
tion and  tracing  by  which  delays  are  avoided,  the  whole  supported  by 
modern  organization  and  management,  can  defy  competition. 


CHAPTER  XIII. 
THE  UPBUILDING  OF  A  SELLING  ORGANIZATION. 

TN  a  chapter  as  brief  as  this  must  be,  it  is,  of  course,  out  of  the  ques- 
•*•  tion  to  discuss  at  all  fully  the  broad  general  question  of  methods 
of  selling.  Again,  each  business  has  its  own  peculiarities  which  make 
it  necessary  to  apply  special  methods.  At  the  same  time,  much  can 
be  said  on  that  question  of  tremendous  importance — the  upbuilding 
of  a  highly  trained,  efficient  selling  force — that  will  be  applicable  to  a 
business  of  any  character.  Different  methods  of  making  different 
manufactured  goods  make  necessary  some  change  in  the  plans,  but 
in  almost  every  case  the  fundamental  elements  are  the  same. 

Methods  of  selling  manufactured  goods  may  broadly  be  divided  into 
four  divisions: — 

First,  where  the  goods  are  sold  direct  to  the  consumer  by  sell- 
ing representatives  of  the  manufacturing  concern  itself.  This  may 
be  either  through  the  company  branch  houses,  or  commission  or 
salaried  men,  all  of  whom  are  employed  and  paid  by  the  company. 
In  this  case,  while  considerable  working  capital  is  tied  up  and  the 
stock  of  goods  must  be  heavy,  at  the  same  time  the  selling  division 
is  directly  under  the  control  of  the  management  and  the  territories 
themselves  secure  a  company  representation  possible  hi  no  other  way. 

Second,  selling  to  exclusive  agencies,  who  themselves  employ 
salesmen  to  deal  direct  with  the  consumer  This  plan  has  much 
merit,  although  it  is  often  difficult  to  devise  plans  whereby  the 
agencies  themselves  may  be  forced  to  cover  their  territories  and  to 
develop  an  efficient  selling  department.  It  is  also  important  to 
notice  here  that  in  such  cases  the  manufacturing  company  very  often 
does  not  come  into  close  contact  with  the  individual  members  of  the 

124 


THE   SELLING   DEPARTMENT  125 

selling  division  of  such  agencies,  and  thus  their  methods  are  not 
properly  impressed  upon  the  men.  A  connecting  bond  between 
such  agency  salesmen  and  the  manufacturing  concern  is  of  great 
importance.  This  becomes  especially  so  in  cases  of  sudden  termina- 
tions of  contract,  etc. 

Third,  selling  to  jobbers.  This  plan  is  susceptible  of  such  variety 
that  it  hardly  needs  consideration.  Close  connection  between  the 
jobber  and  the  manufacturing  company  is  very  necessary.  Constant 
and  skilful  attention  must  be  paid  him  in  order  to  secure  adequate 
and  permanent  representation. 

Fourth,  direct  advertising,  selling  by  catalogues,  etc.  A  dis- 
cussion of  this  method  of  marketing  product  need  not  be  considered 
here. 

Whatever  the  business,  whatever  the  method  of  selling,  the 
importance  of  a  highly  trained  efficient  selling  division  stands  out 
paramount.  In  developing  a  selling  force,  we  must  consider: — 

1. — Training  of  salesmen. 

2. — Training  of  sales  managers. 

3. — Developing  of  a  proper  system,  whereby  both  salesman  and 
sales  manager  can  be  properly  checked  up — the  former,  to  ascertain 
if  he  is  properly  covering  his  territory,  and  getting  his  full  quota  of 
business,  securing  proper  prices  and  terms,  and  keeping  his  old  and 
new  customers  satisfied;  the  latter,  to  see  if  he  has  the  proper  grade 
of  salesmen  employed,  proper  control  over  them,  proper  methods  of 
training  them;  also  to  note  if  he  is  securing  an  adequate  volume  of 
business  at  such  prices  and  with  such  economy  in  operating  expenses 
as  to  guarantee  a  sufficient  profit. 

TRAINING  OF  SALESMEN. 

Singularly  enough,  the  majority  of  concerns  today  spend  tens  of 
thousands  of  dollars  in  advertising  and  in  forcing  the  attention  of 
the  public  upon  their  goods — in  "creating  the  demand" — and  yet 
they  fail  to  train  their  sales  employees — the  men  and  women  upon 


126  PROFIT-MAKING    MANAGEMENT 

whom  they  must  absolutely  and  finally  depend  as  "  closers" — so  that 
they  may  know  the  "  talking  points"  of  their  goods,  the  best  methods 
of  presenting  their  arguments,  and  the  surest  methods  of  finally 
"clinching  the  order."  The  unknowing  sales  manager  often  dis- 
misses the  argument  in  favor  of  training  of  the  salesmen  with  the 
trite  remark  "salesmen  are  born,  not  made."  A  mischievous  belief! 
Granted  that  some  men  are  by  nature  better  fitted  for  selling  than 
others,  those  men  are  only  too  few.  Training  would  surely  improve 
their  efficiency.  Unfortunately,  however,  we  manufacturers  who 
market  our  own  goods  can  find  but  very  few  of  these  "born  sales- 
men," and  are  obliged  to  rely  upon  the  "average  salesman"  for  the 
most  of  our  business  getting.  Such  being  the  fact,  it  must  be 
apparent  that  the  average  selling  division  needs  badly  a  scientific  and 
systematic  method  of  training,  in  order  that  the  large  proportion 
of  "average  salesmen"  may  be  brought  to  as  high  a  degree  of  effi- 
ciency as  possible.  Nor  does  the  advantage  to  be  reaped  stop  simply 
with  the  training  of  the  employees  in  selling.  The  meetings  which 
this  system  calls  for,  if  managed  aright,  are  sure  to  prove  of  immense 
benefit  in  arousing  a  healthy  and  stimulating  enthusiasm  in  the 
employees  affected.  An  honest  desire  and  intent  on  the  part  of  these 
salesmen  to  "put  in  the  best  licks  for  the  House"  gives  an  impulse 
to  their  activities  that  nothing  else  can  supply.  This  feeling  can  be 
instilled  into  them  by  a  skillful,  tactful  sales  manager.  Do  not  forget 
that  a  sullen,  listless,  or  disloyal  member  of  your  selling  force  affects 
your  profits  immediately.  If  you  have  many  such,  your  department 
is  costly  and  inefficient.  The  effect  of  your  thousands  spent  on 
advertising  is  nullified  by  such  conditions.  On  the  other  hand,  a 
highly  trained,  loyal,  interested  and  active  selling  force  is  one  of  the 
most  valuable  assets  a  firm  can  possess.  That  such  a  selling  organi- 
zation can  be  developed,  even  from  one  of  a  peculiar  degree  of 
inefficiency,  has  been  proven  by  a  long  personal  experience  in  several 
lines  of  business  and  very  close  observation  of  the  results  obtained 
in  other  modern  business  concerns. 


THE    SELLING    DEPARTMENT  127 

John  H.  Patterson,  the  brilliant  president  of  the  National  Cash 
Register  Company  of  Dayton,  Ohio,  was  the  first  business  man 
to  grasp  the  possibilities  that  lie  in  the  training  of  the  salesman. 
Through  his  genius,  his  company  has  developed  probably  the  greatest 
and  most  efficient  selling  organization  in  the  business  world  today. 
His  example  has  been  followed  hi  the  manufacturing  business  by 
such  concerns  as  the  Burroughs  Adding  Machine  Company  and  the 
Herring-Hall-Marvin  Safe  Company,  with  decided  success.  Work 
of  this  character  has  been  successfully  applied  to  "Hapgoods,"  the 
firm  doing  a  large  employment  business.  Indeed,  its  essential  prin- 
ciples can  be  adapted  to  the  conditions  of  a  business  of  any  character 
in  which  the  marketing  of  goods  plays  a  large  part. 

DEVELOPMENT  OF  A  SELLING  SYSTEM. 

While  each  business  requires  special  study  and  special  methods, 
the  general  plans  of  the  "Science  of  a  Selling  System"  can  be  clearly 
pointed  out  so  that  they  may  be  adapted.  The  two  essential  fea- 
tures of  this  system  are  "  Salesmen's  Demonstration  Meetings"  and 
"Salesmen's  Training  Department. ' '  While  the  "Salesmen's  Training 
Department"  is  in  fact  the  more  important  feature,  I  place  the 
"Salesmen's  Demonstration  Meetings"  first,  because  the  training 
department  is,  nine  times  out  of  ten,  the  outgrowth  of  the  demonstra- 
tion meetings.  The  logical  beginning  of  this  system  is  with  these 
meetings,  because  the  points  to  be  used  in  the  training  department 
are  invariably  secured  from  the  discussions  arising  in  these  meetings. 
Again,  these  meetings  serve  as  a  gradual  introduction  for  the  later 
training  department,  and  so  accustom  the  selling  force  to  the  methods 
themselves  that  there  arises  but  Httle  opposition  to  the  training 
department  when  it  is  first  proposed.  Each  salesman,  too,  feels  that 
he  has  had  some  part  in  the  development  of  the  training  department, 
inasmuch  as  his  own  arguments  are  often  used,  and  so  thorough 
support  can  be  elicited  in  place  of  the  violent  opposition  that  may 
be  expected  if  any  arbitrary  methods  are  used.  Woe  betide  the  sales 


128  PROFIT-MAKING    MANAGEMENT 

manager  and  the  sales  system  if  he  starts  at  the  "other  end  of  the 
line,"  and  attempts  to  force  these  methods  upon  his  selling  depart- 
ment before  the  members  are  ready  for  it. 

SALESMEN'S  WEEKLY  DEMONSTRATION  MEETINGS. 

The  points  that  will  be  brought  out  in  regard  to  these  meetings 
need  no  elaboration,  as  their  merit  is  self-evident. 

First,  a  time  for  these  meetings  must  be  set  and  constant  attend- 
ance insisted  upon.  The  sales  manager  must  invariably  be  present 
and  take  part  in  discussions  of  all  matters  of  importance.  If  possible, 
some  higher  official  should  be  present  once  a  month,  in  order  to 
inject  a  new  interest  and  new  quality  of  enthusiasm  into  the  salesmen. 
It  will  stir  up  both  salesmen  and  sales  manager  tremendously  if  they 
are  compelled  to  exhibit  before  someone  high  in  authority. 

Second,  it  must  be  kept  in  mind  that  these  meetings  are  for  the 
training  of  the  salesmen  (and  incidentally  the  manager)  and  helping 
them  over  their  difficulties,  for  arousing  interest  and  enthusiasm, 
for  giving  the  salesmen  a  chance  to  "  blow  off  steam"  on  any  trouble 
they  may  have  that  is  affecting  their  efficiency,  and  for  securing  from 
them  suggestions  for  the  improvement  of  the  business.  A  sample 
weekly  programme  follows : 

PROGRAMME  OP  SALESMEN'S  DEMONSTRATION  MEETING. 

1. — Announcements.     By  Sales  Manager. 

2. — Description  of  new  products  and  fields  they  are  designed  to  fill.    By  Sales 

Manager.     (Suggestions  and  criticisms  from  salesmen  requested.) 
3. — Demonstration  of  salesmanship.    By  Salesman — J.  H.  Smith. 

By  Customer — G.  R.  Brown  (Salesman). 
Censors— R.  Fowler,  H.  White, 
(a)  Selling  the  product  to  the  customer  whose  business  is  carefully  selected 

and  who  desires  a  good  article. 
or  (b)  Selling  customer  asking  for  low-priced  article,  a  higher-priced  and  more 

profitable  product. 

or  (c)  Selling  second-hand  product  to  customer, 
or  (d)  Selling  customer  asking  for  second-hand  product  a  new  product. 


THE   SELLING   DEPARTMENT  129 

or  (e)  Selling  customer  new  product,  taking  old  product  in  exchange,  at  profit- 
able allowance  figure, 
or  (f)  Selling  customer  against  strong  competition,  another  salesman  entering 

the  demonstration  as  competitor's  salesman. 

NOTE  :  These  demonstrations  may  be  varied  by  having  the  same  points  illustrated 
as  "Company-office  Sales,"  where  all  stock  and  other  paraphernalia  are  present,  or 
as  sales  at  the  customer's  office,  where  the  salesman  must  depend  upon  illustrations, 
samples  and  catalogs. 

4. — Discussion  of  demonstration,  first,  by  the    appointed  censors,  Fowler  and 

White,  and  second,  by  each  salesman  personally. 

5. — Discussion  of  week's  business;  why  individual  salesmen  have  not  made 
their  quota  of  sales  and  difficulties  met  by  salesmen,  from  blackboard 
individual-sales  record  and  from  individual-sales  reports. 

6. — A  talk  by  the  sales  manager  or  some  high-grade  salesman  on  general  impor- 
tant points  of  salesmanship,  such  as: 

Investigation  of  prospective  customer's  business  and  his  methods. 
The  proper  "lining  up"  of  selling  arguments  so  that  the  "selling  climax" 

may  come  at  the  right  time. 
Methods  of  introduction,  or  "the  approach." 

Methods  of  getting  the  prospective  customer's  attention  and  making  demon- 
strating arguments. 

Methods  of  using  closing  arguments  and  "getting  the  signature  to  the  order." 
Ways  to  meet  certain  arguments  and  objections  of  prospective  customer. 
Ways  to  meet  competitors'  claims  and  arguments. 
Methods  of  cultivating  a  territory. 
Importance  of  "satisfied  user." 
Importance  of  "knowledge  of  the  business." 

Advantages  to  be  gained  by  paying  close  attention    to  such  seemingly 

small  points  as  tact,  dress,  industry,  perseverance,  talking  too  fast  or  too 

much,  answering  customer's  questions  quickly,  and  a  multitude  of  similar 

matters,  perfection  in  which  is  so  important. 

7. — Discussion  of  different  competitors'  products,  their  talking  points  and  how  to 

controvert  them,  their  defects  and  how  to  prove  them. 
8. — Suggestions  and  complaints. 
9. — General  subjects  such  as  advertising,  etc. 

Keeping  in  mind  the  main  objects  of  this  sales  system — the  crea- 
tion of  interest  and  enthusiasm  and  the  training  of  salesmen — an 
examination  of  the  preceding  suggested  programme  leaves  an  explan- 
ation almost  superfluous. 

In  making  announcements  and  describing  new  products,  much  can 
be  done  to  create  a  lively  interest  in  the  company's  affairs  on  the 


130  PROFIT-MAKING   MANAGEMENT 

part  of  the  salesman.  A  frank  and  full  discussion  of  new  products 
or  proposed  new  designs  will  often  prevent  serious  mistakes  and  will 
almost  invariably  result  in  suggestions  that  will  make  the  product 
more  marketable. 

The  suggested  variations  of  "  Demonstrations  of  Salesmanship" 
are  also  self-explanatory.  Note  carefully  the  appointment  of  cen- 
sors. It  is  also  especially  desirable  to  hear  comments  upon  demon- 
strations from  each  salesman.  If  the  sales  manager  handles  matters 
right  so  that  the  salesmen  enter  into  this  programme  in  a  proper 
spirit,  there  need  be  no  fear  of  salesmen  becoming  angry  over  fair 
criticisms.  The  "customer"  can  be  selected  from  the  sales  office. 
He  must  be  given  to  understand  that  he  is  not  to  aid  the  salesman 
in  any  manner,  direct  or  indirect,  and  that  he  should  bring  up  all 
the  arguments  and  objections  against  buying  that  he  himself  has 
learned  from  his  own  customers.  In  a  business  where  the  product 
covers  a  broad  field,  embracing  a  number  of  widely  different  kinds 
of  business,  where  a  discussion  of  the  business  system  enters  into  the 
sales,  the  "customer"  and  the  character  of  the  business  can  be 
selected  so  that  in  the  course  of  a  short  time  the  demonstrations  will 
cover  the  entire  field  and  a  full  line  of  argument  be  brought  out  for 
each  line  of  business.  The  character  of  the  business  and  the  condi- 
tions surrounding  it  should  be  thoroughly  understood  before  begin- 
ning. Often  a  salesman  who  has  had  a  particularly  hard  nut  to 
crack  will  suggest  the  conditions  and  himself  act  the  part  of  customer 
against  a  good  salesman,  in  the  hope  of  either  "stumping  him"  or 
getting  some  good  pointers.  Especial  attention  may  well  be  given 
to  methods  of  convincing  a  customer  that  he  should  purchase  a 
higher  priced  and  more  profitable  product.  Inasmuch  as  the  selling 
expense  remains  the  same,  or  very  nearly  so,  an  effective  method  of 
accomplishing  this  will  result  in  a  much  larger  proportion  of  profit. 
The  most  modern  concerns  pay  a  great  deal  of  attention  to  this 
point  and  have  developed  a  highly  scientific  and  effective  method 
for  accomplishing  it.  This  applies  also  to  a  business  hi  which 


THE   SELLING   DEPARTMENT  131 

exchanges  for  old  products  enters  into  a  large  proportion  of  the  sales. 
This  is  often  a  puzzling  feature,  and  unless  thoroughly  understood 
reuslts  in  large  hidden  losses. 

Great  interest  can  be  aroused  by  the  introduction  of  a  salesman 
representing  a  strong  competitor,  who  is  supposed  to  do  his  best. 
Such  exhibitions  are  not  only  highly  instructive,  but  also  inspire 
salesmen  with  a  confidence  in  their  own  goods. 

It  is  important  that  two  demonstrations  be  often  given^  one  con-; 
ducted  by  an  old  and  skilful  salesman  and  one  by  a  newer  member 
of  the  selling  force.  This  not  only  aids  greatly  in  the  education  of 
the  newer  salesman,  but  often  acts  as  a  great  spur  on  the  older  man 
not  to  be  outdone  by  the  newer  ones.  In  conducting  these  demon- 
strations care  must  be  used  to  see  that  no  slipshod  methods  be 
allowed  to  creep  in.  The  "  sales"  must  be  conducted  with  all  the  dig- 
nity and  formality  of  a  real  transaction  from  the  beginning,  in  order 
that  the  best  form  of  "approach"  or  introduction  of  the  subject  may 
be  observed. 

A  better  method  of  instilling  selling  confidence  into  a  man  is 
hard  to  devise.  After  he  has  had  to  appear  several  times  before 
a  body  of  his  selling  companions  and  his  superior  officers  he  gains 
confidence  rapidly  and  his  attacks  of  "nerves"  are  things  of  the  past. 
Such  methods  quickly  develop  the  "quitter,"  for  his  improvement; or 
elimination  from  the  organization.  They  certainly  show  up  the  "dead 
wood"  quickly. 

The  talks  by  sales  manager  or  high-grade  salesman  upon  general 
selling  points,  as  noted  under  programme  item  6,  will  prove  of  great 
benefit  to  new  salesmen.  The  points  brought  forth — taken  by  a 
stenographer — are  of  great  value  later  when  organizing  a  method 
of  training.  The  items  given  embrace  only  a  very  few  of  the  impor- 
tant topics  that  may  be  discussed,  but  are  given  to  illustrate  clearly 
the  nature  of  the  talk  suggested. 

Discussion  of  Competing  Product. — While  it  is  not  of  ten  advisable  to 
instruct  salesmen  to  talk  against  competitors'  goods,  I  regard  it  as 


132  PROFIT-MAKING   MANAGEMENT 

absolutely  necessary  that  salesmen  be  thoroughly  posted  on  the  char- 
acter of  competitors'  products.  Very  often  true  statements  of  defects 
in  such  articles  become  necessary. 

Suggestions  and  Complaints. — This  section  deserves  more  consid- 
eration than  can  be  given  it  at  this  point.  Nothing  is  more  vital  to 
the  progress  of  a  company  than  the  proper  and  conservative  meeting 
of  the  actual  market  demands  and  the  improvement  of  product  so  as, 
if  possible,  to  keep  ahead  of  the  demand.  No  one  knows  the  needs 
of  the  market  or  the  advancement  of  competition  as  does  the  sales- 
man. A  systematic  plan  to  secure  these  suggestions  from  the  body  of 
salesmen  will  prove  of  very  great  value.  The  same  may  be  said 
regarding  complaints.  Legitimate  complaints  should  be  "aired/'  and 
when  the  causes  are  ascertained  prompt  steps  taken  to  rectify  the 
troubles.  Many  a  firm  today  prefers  to  shut  its  "  business  ears  and 
eyes"  and  refuses  to  hear  of  troubles  or  to  see  perfectly  obvious 
defects  which  are  continually  having  a  disintegrating  though  hidden 
effect  upon  the  business  and  organization. 

The  details  of  these  meetings  should  be  invariably  taken  down  in 
shorthand.  I  have  found  it  of  great  value  to  have  sufficient  copies 
of  the  proceedings  of  each  meeting  made  to  allow  of  their  being  dis- 
tributed to  the  sales  managers  in  all  parts  of  the  country. 

It  is  important  that  the  general  sales  manager  consider  it  his 
particular  duty  to  read  carefully  all  minutes  of  these  meetings  and 
then  to  write  to  each  local  sales  manager,  commenting  upon  them, 
(in  each  case  mentioning  names  of  salesmen).  The  effect  upon  both 
manager  and  men  is  very  beneficial. 

The  quality  of  the  demonstration  affords  a  very  good  proof  of 
the  calibre  of  the  salesmen  in  each  district  and  thus  provides  the 
clearest  kind  of  an  index  to  the  quality  of  salesmen  throughout  all 
the  points  of  the  organization.  Again,  the  salesmen  are  impelled  to 
do  their  level  best,  knowing  that  the  general  sales  manager  will  him- 
self note  the  character  of  their  work,  even  though  he  may  be  thou- 
sands of  miles  away.  By  such  a  simple  means  the  influence  and 


THE   SELLING   DEPAKTMENT  133 

power  of  the  general  sales  manager  will  be  felt  throughout  the  entire 
selling  organization. 

SALESMEN'S  TRAINING  DEPARTMENT. 

While  much  good  can  be  derived  from  such  weekly  meetings, 
the  progress  of  the  men  toward  high-grade  selling  is  necessarily 
slow.  The  influence  toward  rational  methods  is  not  constant  enough. 
Again,  constant  individual  attention  should  be  given  the  new  men 
at  the  beginning  so  that  they  may  have  the  full  benefit  of  such 
methods  early  in  their  selling  career.  Experience  has  shown  that 
the  only  rational  plan  for  developing  salesmen  rapidly  and  upbuilding 
a  strong  homogeneous  selling  department  is  to  develop  a  strong 
training  department  for  salesmen.  This  department  should  be  hide- 
pendent  of  the  influence  of  any  local  sales  manager,  but  should  be 
under  the  direct  supervision  of  the  general  sales  manager.  It  should 
be  his  "  selling  right  hand.'7  All  local  managers  should  be  thoroughly 
trained  in  this  department's  methods  so  as  to  supplement  its  activity 
in  their  own  local  districts.  All  salesmen  should  be  trained  therein. 
Particular  attention  should  be  paid  to  the  export  trade  agencies. 
Some  firms  establish  training  departments  hi  the  several  foreign 
countries.  Personally,  I  prefer  to  have  even  representatives  of  export 
agencies  taught  at  the  home  office,  so  that  they  can  not  only  get  the 
best  possible  course  of  instruction  but  also  may  come  under  the 
direct  strong  influence  of  the  home-office  executives. 

The  first  step  (and  often  the  most  difficult)  is  to  find  the  proper 
instructor.  No  greater  mistake  can  be  made  than  to  attempt  to  use 
a  cheap  man.  This  work  requires  a  man  with  the  widest  selling 
experience,  coupled  with  great  tact,  patience,  and  teaching  ability; 
a  man  whom  the  salesmen  will  respect  for  his  ability.  The  outline  of 
his  work  will  demonstrate  the  necessity  for  having  a  man  of  sterling 
ability. 

His  first  work  will  be  to  prepare  a  "Manual"  for  salesmen.  This 
must  contain: 


134  PROFIT-MAKING   MANAGEMENT 

a.  Strong  points  on  general  salesmanship. 

b.  A  thorough  and  careful  explanation  of  each  product  and  its  adaptation  to  all 

different  lines  of  business. 

c.  An  exceedingly  thorough  explanation  of  the  "talking  points"  or  "selling 

arguments"  of  each  product. 

d.  An  analysis  of  competitors'  products  and  a  comparison  with  the  manufactur- 

ing company's  product. 

e.  A  careful  and  scientific  analysis  of  the  best  methods  of  introduction  to  a  pros- 

pective customer  so  as  to  gain  his  attention  and  interest,  this  forming  the 
"approach." 

f.  Statements  of  the  best  methods  of  marshalling  the  talking  points  together 

so  that  a  demonstration  of  the  product's  merits  may  be  made  to  the  cus- 
tomer— this  forming  the  "demonstration  and  argument." 

g.  A  thorough  and  complete  analysis  of  the  best  "closing  arguments"  and  dis- 

cussion of  various  ways  to  "get  the  order  signed." 

h.  A  full  list  of  the  most  common  objections  to  making  a  purchase  and  ways  of 
meeting  these  objections.  After  this  plan  is  worked  out,  it  will  astonish 
many  to  note  how  simply  the  objections  to  purchasing  on  the  part  of  pros- 
pective customers  can  be  classified.  It  will  also  astonish  the  average  sales 
manager  to  note  how  many  different  and  excellent  answers  can  be  made 
to  these  objections  by  taking  the  answers  to  these  by  many  managers  and 
salesmen  in  different  parts  of  the  country.  Whenever  a  salesman  meets 
with  some  new  form  of  rebuff,  arguments  to  meet  a  new  condition  can 
quickly  be  secured  by  referring  the  question  to  the  different  managers  for 
settlement  in  their  weekly  demonstration  meetings. 

i.  Much  space  may  well  be  given  to  a  thorough  and  logical  explanation  of  best 
methods  of  raising  a  customer  desiring  a  low-priced  product  to  one  of 
higher  price,  "Raising  him  up  the  line,"  as  it  is  called.  Really  scientific 
work  can  be  done  along  this  line.  Methods  of  handling  second-hand  sales 
and  exchange  sales  should  also  be  treated  fully. 

It  will  be  noted  that  almost  all  of  these  invaluable  data  can  be 
secured  from  the  salesmen's  demonstration  meeting  reports. 

After  the  selection  of  the  instructor  and  preparation  of  the  manual 
the  balance  of  the  work  is  largely  routine. 

First,  each  man — new  or  old —  must  be  made  to  learn  the  manual 
"backward  and  forward."  No  halfway  learning  can  be  tolerated. 
He  should  then  be  thoroughly  drilled  in  the  "approach,"  "demon- 
stration" and  "closing"  arguments  under  differing  conditions  along 
the  lines  noted  in  the  Programme  of  Salesmen's  Demonstration 
Meetings.  He  should  be  compelled  to  go  through  these  in  the  regular 


THE    SELLING    DEPARTMENT  135 

demonstration  meetings  before  the  entire  body  of  salesmen.  This 
process  will  require  from  two  to  six  weeks  depending  upon  the  man 
and  the  character  of  the  business.  He  is  then  started  out  in  a  terri- 
tory and  carefully  watched.  It  is  well  also  at  times  to  have  him 
attempt  to  make  a  sale  at  the  office  so  that  his  methods  may  be  noted. 
After  about  a  week  of  this  experience  the  instructor  should  accom- 
pany him  on  his  regular  rounds  so  as  to  note  his  methods.  Failure 
to  attend  to  important  points  may  thus  be  observed.  The  instructor 
should  then  illustrate  the  proper  methods  by  taking  the  selling  end 
himself  with  several  prospective  customers  and  closing  the  sales. 
After  the  salesman  has  been  in  his  territory  for  a  full  month  the 
instructor  should  spend  another  period  with  him. 

After  these  men  are  distributed  to  different  territories  the  local 
manager  should  give  them  the  same  attention. 

The  instructor  should  visit  the  several  territories  from  time  to 
time  and  note  closely  the  salesmen's  method  of  demonstration,  both 
in  the  weekly  salesmen's  meeting  and  before  their  customers.  A 
constant  and  close  study  of  weekly  sales  reports,  supplemented  by 
the  reports  of  the  weekly  demonstration  meeting,  will  clearly  indi- 
cate the  weak  spots  needing  attention. 

The  local  managers  should  from  time  to  time  be  called  into  the 
home  office  for  conventions.  These  can  be  made  exceedingly  helpful 
to  both  company  and  managers.  They  are  the  backbone  of  the  selling 
division  and  they  cannot  be  watched,  trained,  inspired,  and  worked 
with  too  much.  Not  only  must  they  be  driven  on  the  question  of 
sales,  but  they  must  also  be  held  responsible  for  economy  in  manage- 
ment. 

The  devising  of  proper  sales  systems  is  a  subject  in  itself  that  can- 
not be  fully  treated  here. 

It  is  essential  though  that  mention  be  made  of  the  two  forms  from 
which  spring  many  branches  of  the  system,  namely,  the  Salesman's 
Daily  Reports.  One  covers  sales  made  and  gives  the  important  details 
as  to  the  customer  and  his  business;  the  other  covers  cases  of  failure 


136  PROFIT-MAKING    MANAGEMENT 

and  gives  the  reasons  for  non-success.    The  two  forms  are  shown 
below : — 

SALESMAN'S  DAILY  REPORT  OP  SALES. 

Name  of  Customer Rating Date 

Character  of  business  and  system  used 

What  Sold Date  Delivery 

Higher  Priced  Machine  needed (Date) 

Duplicate  Machine  needed (Date) 

Send  advertising  matter  as  follows: 

SALESMAN'S  DAILY  REPORT  OF  FAILURE. 


Name  of  Customer Rating Date 

Character  of  business  and  system  used 

What  needed? Why  not  sold? 

Date  to  return 

Send  advertising  matter  as  follows: 


Couple  these  two  reports  with  a  comprehensive  list  of  prospective 
customers,  and  you  have  the  best  foundation  for  a  comprehensive 
and  valuable  sales  system.  Many  other  forms  will  naturally  be 
added  to  these  and  many  different  methods  used  for  properly  tracing 
up  "prospective  customers"  noted  from  these  reports. 

Through  your  prospective  customer  list,  coupled  with  the  sales- 
man's daily  reports,  you  can  determine  whether  or  not  each  man  is 
properly  covering  his  territory.  If  he  is  not,  you  can  make  him  do  so. 
The  daily  reports  data  enable  you  to  classify  these  prospective  cus- 
tomers so  that  you  may  be  sure  that  they  receive  the  proper  attention 
at  the  proper  time  and  the  proper  kind  of  advertising  matter  pending 
the  next  visit  of  the  salesman.  These  reports  are  capable  of  indefinite 
amplification  along  lines  which  will  be  of  immense  benefit  to  the  busi- 
ness, especially  when  used  hi  connection  with  a  sales  system  along  the 
lines  described.  Such  systems  will  admirably  supplement  the  factory 
methods  advocated  in  preceding  papers,  and  will  serve  to  unify  the 


THE   SELLING   DEPAKTMENT  137 

entire  plan  of  organization,  business,  and  method  along  such  logical 
lines  that  there  can  be  but  one  result— Progress! 

A  selling  department  built  up  along  such  lines  is  the  best  guar- 
antee of  high  prices  and  good  profits — a  bulwark  of  strength  against 
competition,  and  the  strongest  possible  business  foundation,  especially 
in  tunes  of  industrial  depression. 


CHAPTER  XIV. 

EFFECTIVE  ORGANIZATION  IN  THE  EXECUTIVE 
MANAGEMENT. 

'TpHE  preceding  chapters  have  dealt  somewhat  fully  with  the 

-••  defects  existing  in  the  average  manufacturing  concern  as 
regards  its  organization  and  its  selling  and  factory  methods  arid  sys- 
tems, and  have  indicated  some  methods  of  overcoming  these  troubles 
that  have  been  found  effective  hi  everyday  practice  in  the  upbuilding 
of  run-down  concerns. 

This  discussion  would  not  be  complete  unless  the  executive  divi- 
sion, whether  it  consists  of  one  man  or  twenty,  were  given  some 
treatment.  For  indeed  the  troubles — the  defects,  both  in  organiza- 
tion and  methods,  that  may  be  met  with  in  selling  force  or  factory — 
exist  in  particular  strength  hi  many  an  executive  division,  and  cause 
infinite  trouble.  The  small  jealousy  that  impels  one  man  or  one  group 
of  men  to  underrate  the  value  of  work  done  by  others,  the  lack  of 
unity  of  purpose  which  often  leads  one  set  of  men  to  block  surrepti- 
tiously the  good  work  of  another  group,  often  works  incalculable  loss. 

The  larger  and  more  complex  the  executive  end  of  a  business,  the 
more  important  'does  it  become  that  great  care  be  used  in  organ- 
izing it  in  such  a  manner  that  each  member  of  this  group  shall  be 
allowed  to  do  his  own  work  without  interference  from  others,  and 
yet,  at  the  same  time,  that  each  member  shall  bring  to  the  business 
and  to  the  most  serious  problems  in  the  business  his  best  judgment  on 
the  business  as  a  whole,  and  pour  into  a  common  reservoir  his  rea- 
son for  objection,  his  particular  plan,  his  best  thought,  his  enthusiasm, 
his  best  self,  for  "the  good  of  the  business." 

As  long  as  the  executive  force  work  in  unison,  the  balance  of 

138 


THE  GENERAL  EXECUTIVE  139 

the  organization  will  generally  do  likewise.  Let  there  be  discord  and 
lack  of  harmony  amongst  the  heads  of  the  business,  and  there  will  be 
an  instant  lining  up  of  forces  in  opposition  one  to  the  other  from 
one  end  of  the  working  body  to  the  other.  This  lack  of  harmony  in 
the  executive  division  arises  for  reasons  similar  to  those  that  disin- 
tegrate the  balance  of  the  organization  and  cause  it  to  lose  so  much  of 
its  latent  power.  The  only  cure,  hi  my  opinion,  is  the  old  one  of  "  get- 
ting together."  The  general  ideas  already  expressed  in  earlier  chap- 
ters of  this  book  relative  to  the  formation  of  committees  are  particu- 
larly applicable  here. 

It  is  my  intention  to  illustrate  briefly  the  work  of  a  group  of  execu- 
tives, showing  how  the  work  of  each  one  is  related  to  and  interlaced 
with  the  work  of  all.  Before  doing  so,  however,  it  is  advisable  to  con- 
sider a  few  suggestive  forms  of  reports  from  different  sections  of  the 
organization  which  are  very  necessary  in  order  that  a  full  grasp  upon 
the  business  may  be  held  by  those  managing  it.  Of  course  no  attempt 
to  outline  fully  any  system  of  reports  generally  applicable  could  be 
successful.  The  general  forms  of  the  ones  suggested,  however,  are 
adaptable  to  many  differing  conditions. 

EXECUTIVE  REPORTS  FROM  SELLING  DIVISION. 

As  a  fundamental  form  of  report  invariably  necessary  I  submit  one 
which  shows  how  much  business  must  be  done  in  each  line  of  product 
and  hi  each  territory.  This  must  show  the  volume  of  sales  required  in 
detail.  As  against  this  there  must  be  set  the  allowable  factory  costs, 
together  with  allowable  costs  of  extras  of  all  character.  In  addition 
to  this,  there  must  be  carefully  calculated  out  the  allowable  selling 
expense,  including  all  items,  such  as  salesmen's  and  managers' 
salaries,  commissions,  traveling  expenses,  advertising,  etc.  There 
must  further  be  shown  the  allowable  general  expense,  such  as  rent, 
insurance,  taxes,  telephone,  telegraph,  office  salaries,  etc.  In  all 
cases  allowable  percentages  should  be  carefully  worked  out. 

The  "allowable  amounts"  must  be  calculated  from  close  knowl- 


140 


PROFIT-MAKING    MANAGEMENT 


edge,  first,  of  how  much  profit  the  concern  should  make;  second,  of 
how  much  profit  should  come  from  each  territory  considering  the 
possibilities  of  the  business  and  expense  of  conducting  it.  When 
these  computations  are  made  for  each  territory,  covering  selling  prices, 
factory  costs,  selling  and  general  expenses,  together  with  percentage 


% 

N.  Y.  Branch. 

% 

Phila.  Branch. 

Etc. 

Required  Sales. 
Amounts  (Classified). 

Factory  Costs. 
Amounts  (Classified)  .... 
All    other    Cost    Items 
Classified 

Gross  Profits             .... 

Selling  Expenses 
(Classified), 
(a)  Salesmen,  salaries  
(b)          u        commissions 
(c)          *        expenses  .  .  . 
(d)  Mngrs.,  salaries  
(e)         "      expenses  
(f)  Advertising  

Total  Selling  Expense 

General  Expenses 
(Classified) 
(a)  Ren  t,    Insurance, 
Taxes  

(b)  Office  Salaries  

(c)  Telegraph    and    tele- 
phone     

(d)  Miscellaneous  
(e)  Legal,  etc  

Total  General  Expense 

Total  All  Expense  

Net  Profit  Required  .  .  . 

STANDARD  SELLING  RECORD. 

This  Record  is  used,  first,  for  showing  required  sales  and  allowable  expenses  with 

percentages ;  second,  for  showing  actual  sales  made  and  actual  expenses  incurred 

and  percentages.     The  use  of  the  same  form  facilitates  comparisons. 


THE  GENERAL  EXECUTIVE  141 

calculations,  showing  the  proper  relationship  of  all  of  these  items,  you 
have  a  solid  foundation  upon  which  to  work  and  from  which  to  drive 
for  business.  Of  course  this  should  be  carried  much  further  within 
the  selling  division.  Each  salesman  should  have  his  record  to  strive 
for.  His  showing  should  be  based  upon  the  same  idea. 

Having  these  data,  the  next  step  naturally  is  to  supply  the  exact 
information  as  to  sales  record  and  expenses.  The  sales  record,  as 
far  as  the  selling  division  is  concerned,  should,  of  course,  be  made  up 
daily,  the  expense  items  being  roughly  calculated  upon  a  percentage 
basis.  The  monthly  sales  record  should,  however,  be  complete.  It 
should  follow  exactly  the  lines  of  the  standard  selling  record  shown 
opposite,  the  sales  data  being  taken  from  the  sales  records,  the  ex- 
pense data  directly  from  the  accounting  department.  This  leaves 
in  the  mind  of  each  manager  of  a  selling  division  no  iota  of  doubt  as 
to  what  must  be  done,  and  by  comparison  he  sees  how  much  he  has 
gained  or  how  far  he  has  fallen  behind.  Such  reports  provide  the 
executives  with  accurate  and  usually  much  needed  indices  of  sales 
conditions.  They  are  especially  valuable  where  the  business  done  is 
hi  the  nature  of  long-time  contracts  under  which  deliveries  are  made 
for  long  periods  after  the  actual  sales  are  recorded. 

Other  selling-division  reports,  such  as  those  showing  the  distribu- 
tion of  sales,  the  covering  of  territories,  the  development  of  the  selling 
efficiency  of  the  organization,  etc.,  and  the  condition  of  competition, 
would  naturally  be  made  and  need  no  discussion  here. 

FACTORY  REPORTS. 

In  preceding  chapters  and  in  my  articles  published  hi  The  Engineer- 
ing Magazine  in  1902  the  question  of  factory  reports  has  been  quite 
fully  dealt  with.  From  the  data  secured  through  the  suggested 
methods  many  interesting  and  important  reports  are  derived.  These 
are: 

1.  Factory  Output  and  Efficiency  Report. — This  report  may  be 
adapted  to  meet  the  requirements  of  departmental  efficiency  reports 


142                                          PROFI 

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PROFIT-MAKING    MANAGEMENT 


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Name  and  Location 
of  Customer. 

THE  GENERAL  EXECUTIVE  143 

also.  It  should  compare  the  results  for  various  periods  with  the 
results  of  like  previous  periods,  either  as  a  total  or  au  average.  By 
noting  the  number  of  employees,  pay  rolls,  and  material  purchases, 
and  comparing  the  figures  with  values  of  output  and  inventories,  a 
very  accurate  idea  may  be  secured  as  to  the  relative  efficiency  of  the 
entire  shop  or  any  department. 

2.  Progress-of-Work  Report. — To  every  executive  managing  any 
shop,  and  particularly  those  working  upon  long-time  delivery  contracts 
a  weekly  progress-of-work  report  will  prove  invaluable.  If  this  report 
were  to  be  made  up  from  the  cost  records,  the  task  would  be  a  great 
one.  It  can  be  handled  very  easily  and  simply,  however,  by  the 
committees.  Each  foreman  should  have  a  keen  knowledge  of  the 
progress  of  his  portion  of  any  job.  These  men,  together  with  a  bright 
secretary,  in  one  of  their  regular  meetings  can  easily  and  quickly 
formulate  such  a  progress-of-work  report  as  suggested.  The  advan- 
tages of  such  reports  are  many. 

First,  they  provide  an  alert  executive  with  a  most  important  index 
as  to  progress  of  work  and  enable  him  to  "pound  the  shop"  for  any 
work  that  he  can  note  is  falling  behind. 

Second,  they  force  upon  the  attention  of  the  foreman  individually 
the  progress  of  each  job  in  his  own  department.  They  compel  him  to 
accumulate  a  very  useful  knowledge  of  his  own  work — oftentimes 
lacking. 

Third,  they  place  the  factory  in  possession  of  data  making  it  possi- 
ble to  give  the  selling  department  delivery  dates  which  can  be  met. 

Fourth,  they  are  an  invaluable  aid  to  the  treasurer,  enabling  him 
to  predict  with  some  degree  of  certainty  when  his  collections  will 
come  due.  Especially  valuable  are  they  in  cases  of  large  contracts 
calling  for  partial  payments  as  work  progresses. 

Such  reports,  covering  a  very  wide  variety  of  work,  have  for 
a  long  time  been  made  out  by  our  factories  on  Saturday  morning, 
arriving  on  my  desk  the  following  Monday.  Meetings  with  interested 
heads  of  financial  and  sales  divisions  immediately  follow,  and  as  a 


144 


PROFIT-MAKING    MANAGEMENT 


DATES 


FROM.... 


.....  TO.... 


New  York 
Branch. 

% 

Philadelphia 
Brancn, 

% 

And  all  other 
Selling  Divisions. 

Deliveries  (Classified). 

Total  Deliveries  

Factory  Costs  (Classified). 

Total  Factory  Costs 

All  other  Cost  Charges 
(Classified), 
e.  g.,  Delivery  —  Finishing. 

Total  All  Other  Costs  

Total  Delivered  Costs 

Gross  Profit 

Deduct  Selling  Expense 
(Classified). 
Salesmen,  salaries  and  commis- 
sions                           

(Depmts  )  (a) 

(b).. 

(c) 

Salesmen  expenses          .      .  . 

(Depmts  )  (a) 

(b).. 

(c) 

Mnsrrs    salaries                   .    .  . 

"       expenses 

Advertising               

Total  Selling  Expense  

General  Expenses 
(Classified). 
Office  Salaries                    .... 

Rent,  Insurance  and  Taxes  .  .  . 
Telegrams  Postage,  etc  

Stationery  and  Printing  
Light  Heat  and  Power  

Maintenance 

Adjustments  and  Losses  

Le^al 

Miscellaneous 

Total  General  Expense  

Total    Selling    and    General 
E"5rppnfip                   

Profit    (black).     Loss    (red) 

EXECUTIVE    PROFIT  AND   LOSS   REPORT. 


THE  GENERAL  EXECUTIVE  145 

result  there  exists  the  closest  possible  touch  between  the  several  divi- 
sions upon  the  one  important  point — Production. 

EXECUTIVE  REPORT. 

The  report  of  paramount  importance  is  the  one  illustrated  on  the 
preceding  page.  It  should  be  produced  monthly  from  the  books  of 
the  concern.  The  several  divisions  are  self-explanatory. 

Comparing  this  with  the  selling-division  reports,  there  is  provided 
a  full  index  of  business  conditions.  Couple  it  with  factory  reports 
already  mentioned,  and  a  monthly  balance  sheet  follows. 

Having  now  described  in  a  general  manner  the  detail,  I  can  per- 
haps best  illustrate  the  value  of  the  methods  advocated  by  quoting  a 
programme  of  action  taken  "from  actual  life"  by  a  committee  of 
executives  of  a  very  large  concern.  The  committee  is  formed  of  the 
president,  the  general  manager,  the  treasurer,  the  sales  manager,  and 
the  factory  manager.  The  understanding  is  general  that  heads  of 
departments  shall  frequently  be  called  into  their  conferences.  A  typ- 
ical programme  is  as  follows: — 

President;  acts  as  chairman. 

General  Manager. — Critical  discussion  of  business  conditions,  with  especial 
reference  to  those  sections  in  which  the  records  show  a  decided  falling  off  in 
business.  Discussion  with  sales  manager  as  to  the  reasons  for  this  condition. 
Discussion  develops  that  a  new  form  of  competition  has  arisen  in  that  par- 
ticular region.  Steps  are  taken  immediately  to  meet  this  before  it  grows  to 
greater  strength. 

General  discussion  of  executive  report.  An  analysis  shows  where  the  great- 
est profits  in  the  business  lay  and  where  the  greatest  losses  occurred.  Discus- 
sion of  expense  items  shown  on  executive  report. 

Sales  Manager. — (a)  Reports  on  sales  conditions  in  various  territories  and  orders 
coming  therefrom. 

(b)  Competition;  what  must  be  done  in  way  of  new  methods  or  new  pro- 

duct to  meet  it. 

(c)  Progress  of  training  department. 

(d)  Expense. 

Factory  Manager. — (a)  Discussion  of  factory  output  and  efficiency. 

(b)  The  progress-of-work  report. 

(c)  Report  on  progress  of  new  factory  methods  and  inventions. 


146  PROFIT-MAKING    MANAGEMENT 

Treasurer. — A  discussion  of  financial  outlook  with  especial  reference  to  the  future 
deliveries  as  outlined  on  progress-of-work  report. 

In  this  concern,  formerly  handicapped  severely  by  a  lack  of  knowl- 
edge of  such  important  points,  a  revolution  was  worked  through  the 
adoption  of  the  simple  and  direct  system. 

And  so  I  maintain  that  the  adoption  of  these  simple  and  natural 
methods  will  change  an  organization  burdened  with  jealousies,  handi- 
capped by  misunderstanding,  held  back  by  lack  of  knowledge,  lack  of 
progress  and  general  inefficiency,  to  one  comparatively  free  from 
personal  enmities,  led  by  a  sense  of  certitude  as  to  actual  condition  in 
field  and  factory;  constantly  impelled,  even  in  the  smallest  details, 
toward  a  greater  degree  of  efficiency  and  surcharged  with  the  feeling 
of  true  enthusiasm — the  will  to  work  "for  the  good  of  the  company." 


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